Hi, could someone please help me explain this question [2B.35] ? My answer and the solution seem to vary, which makes me wary. Much appreciated
consider the situation where nest plc chooses a high advertising strategy and clogs plc chooses a low advertising strategy. for NEST: total revenue=12*1.5(SP of 1 unit)=18 total costs=cost of advts+fixed costs+total variable costs =4+0.5+12=16.5 hence profits for NEST are 18-16.5=1.5 similarly for CLOG:total revenue=3*1.5(SP of 1 unit)=4.5 total costs=cost of advts+fixed costs+total variable costs =1+0.5+3=4.5 hence profits for clog is 0 the (clog low, nest high)=(0,1.5) do the same with others depending upon the no of units and the advertising costs.
