Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: BeantownAdvertiseDoesn't AdvertiseExpressoAdvertise8, 815, 2Doesn't Advertise2, 1511, 11 For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.If Expresso decides to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Expresso decides not to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Beantown advertises, Expresso makes a higher profit if it chooses . If Beantown doesn't advertise, Expresso makes a higher profit if it chooses . Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing?Both firms will choose not to advertise. Both firms will choose to advertise. Expresso will choose to advertise and Beantown will choose not to advertise. Expresso will choose not to advertise and Beantown will choose to advertise. Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?Expresso will choose not to advertise and Beantown will choose to advertise. Expresso will choose to advertise and Beantown will choose not to advertise. Both firms will choose not to advertise. Both firms will choose to advertise. * MindTap - Cengage Learning xC 4. Profit Maximization In Theb My Questions | bartlebyM Forgot your password? - love Xue Guest RegistrationA ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090919&E Apps M GmailA Maps A clickserve.dartsearc.E Reading listYouTube«* CENGAGE MINDTAPQ Search this courseLove v4 Му HomeHomework (Ch 17)Dack LU ASSigıientEnter your search termCoursesAttemptsKeep the Highest / 6O Catalog and Study Tools5. To advertise or not to advertiseA-ZEE Rental OptionsSuppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each- College Success Tipscompany will earn depending on whether or not it advertises:Career Success Tips? HelpBeantownO Give FeedbackAdvertise Doesn't AdvertiseAdvertise8, 815, 2ExpressoDoesn't Advertise2, 1511, 11bongoFor example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, andBeantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.If Expresso decides to advertise, it will earn a profit of $million if Beantown advertises and a profit of $million if Beantown does notadvertise.3:19 PMP Type here to searchLO 4)11/29/202170%53°Fx ...

Question

Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: BeantownAdvertiseDoesn't AdvertiseExpressoAdvertise8, 815, 2Doesn't Advertise2, 1511, 11 For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.If Expresso decides to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Expresso decides not to advertise, it will earn a profit of million if Beantown advertises and a profit of million if Beantown does not advertise. If Beantown advertises, Expresso makes a higher profit if it chooses    . If Beantown doesn't advertise, Expresso makes a higher profit if it chooses    . Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing?Both firms will choose not to advertise. Both firms will choose to advertise. Expresso will choose to advertise and Beantown will choose not to advertise. Expresso will choose not to advertise and Beantown will choose to advertise.  Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing?Expresso will choose not to advertise and Beantown will choose to advertise. Expresso will choose to advertise and Beantown will choose not to advertise. Both firms will choose not to advertise. Both firms will choose to advertise. * MindTap - Cengage Learning xC 4. Profit Maximization In Theb My Questions | bartlebyM Forgot your password? - love Xue Guest RegistrationA ng.cengage.com/static/nb/ui/evo/index.html?deploymentld=59828118170010561930692029148&elSBN=9780357133606&snapshotld=2556323&id=1270090919&E Apps M GmailA Maps A clickserve.dartsearc.E Reading listYouTube«* CENGAGE MINDTAPQ Search this courseLove v4 Му HomeHomework (Ch 17)Dack LU ASSigıientEnter your search termCoursesAttemptsKeep the Highest / 6O Catalog and Study Tools5. To advertise or not to advertiseA-ZEE Rental OptionsSuppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each- College Success Tipscompany will earn depending on whether or not it advertises:Career Success Tips? HelpBeantownO Give FeedbackAdvertise Doesn't AdvertiseAdvertise8, 815, 2ExpressoDoesn't Advertise2, 1511, 11bongoFor example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, andBeantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms.If Expresso decides to advertise, it will earn a profit of $million if Beantown advertises and a profit of $million if Beantown does notadvertise.3:19 PMP Type here to searchLO 4)11/29/202170%53°Fx ...

Accepted Answer

If Expresso decides to advertise (top row) it will earn a profit of :
A) 8mn, if Beantown does…

	Beantown
Advertise	Doesn't Advertise
Expresso	Advertise	8, 8	15, 2
Doesn't Advertise	2, 15	11, 11