[Solved] Below Is a Profit Pay-Off Matrix for Two Oligopoly Firms

Question 11
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Below is a profit pay-off matrix for two oligopoly firms: Calvin Inc.and Hobbs Ltd.Calvin's profits are shown in the upper portion of each box and Hobb's are in the lower portion.
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-Refer to the information above to answer this question.All of the following statements expect one,is correct if no agreement between Calvin and Hobbs is in place and each is considering what to do in terms of its advertising budget?


A)Collusion and trust between Calvin and Hobbs is necessary if both are to adopt and maintain a low advertising budget.
B)Without collusion and trust between Calvin and Hobbs,both will adopt a high advertising budget.
C)If Calvin adopts a low advertising budget,then Hobbs will be in a position to profit from this.
D)If Hobbs adopts a low advertising budget,then Calvin will be in a position to profit from this.
E)If Hobbs adopts a high advertising budget and Calvin does not,then Hobbs will earn $300 in profits.

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