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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?
DAT, Inc, company needs to develop an aggregate plan for its product line. Relevant data are Production time: 1 hour per unit Average labor cost: $10/hour Workweek: 5 d
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