Multiple Choice
Two stores are located side by side. They attract customers to each other and to themselves by advertising. The profit functions of the two stores are (75 + x2) x1 - 2x21 for store 1 and (105 + x1) x2 - 2x22 for store 2, where x1 and x2 are total advertising expenditures by stores 1 and 2 respectively. If each store sets its advertising expenditures independently (as in Nash equilibrium) , how much would store 1 spend on advertising?
A) $27
B) $29
C) $32
D) $24
E) None of the above.
Correct Answer:
Verified
Correct Answer:
Verified
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