Refer to the normal-form game of advertising shown below. Suppose there is a 10 percent chance that the advertising game depicted in Figure 10-17 will end next period. What is the present value to firm A of agreeing to the strategy {do not advertise, do not advertise}?
A) $125
B) $237.50
C) $1,250
D) None of the answers is correct.

Question

Refer to the normal-form game of advertising shown below.  Suppose there is a 10 percent chance that the advertising game depicted in Figure 10-17 will end next period. What is the present value to firm A of agreeing to the strategy {do not advertise, do not advertise}?
A) $125 
B) $237.50 
C) $1,250 
D) None of the answers is correct.

Quizplus · Accepted Answer

The Answer of Refer to the normal-form game of advertising shown below.  Suppose there is a 10 percent chance that the advertising game depicted in Figure 10-17 will end next period. What is the present value to firm A of agreeing to the strategy {do not advertise, do not advertise}?
A) $125 
B) $237.50 
C) $1,250 
D) None of the answers is correct.

Refer to the Normal-Form Game of Advertising Shown Below