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2 enterprises (1 and 2), are in competition with each other by choosing advertising expenditures. The payoff functions of the two enterprises, if enterprise 1 chooses to spend x and enterprise 2 chooses y to spend in market 1, are given by
u1 (x; y) = 1 + (x - y) (2 - 3x)u2 (x; y) = 1 + (y - x) (1 - 3y)
a) What is the best response functions of enterprise 1 and enterprise 2.
b) Suggest the Nash equilibrium levels of expenditures by each enterprise?
Consider the following LP problem: Maximize Z = 30X1 + 10X2 Subject to: 3x1 + x2 300 x1 + x2 200 x1 100 x2 50 and x1,x2 0 Solve using the graphical technique
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