The only two window makers compete for sales by increasing advertising. The two firms counter each other with higher and higher expenditures on advertising causing profits to be negative for both firms. This is an example of
A) a zero-sum game.
B) a positive-sum game.
C) a negative-sum game.
D) none of the above.

Question

Quizplus · Accepted Answer

This scenario is an example of a negative-sum game because both firms are incurring losses due to their escalating advertising expenditures. In a negative-sum game, the total losses exceed the total gains, leading to a net decrease in benefit or profit for all parties involved.

The Only Two Window Makers Compete for Sales by Increasing