Pepsi is considering an expensive advertising campaign to steal market share from Coca-Cola. Why might both companies have a dominant strategy to advertise, even if advertising attracts few new customers to the cola drink industry?
The dominant strategy for both firms may be to pursue an aggressive, even expensive, advertising campaign in order to protect against the potential erosion of their own market shares. Advertising may simply be "defensive" in nature. If Coca-Cola anticipates that Pepsi will launch the new ad campaign, it is likely to launch its own campaign to thwart the ability of Pepsi to lure customers away.
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In the above figure, a price floor of $4
A) leads to a shortage. B) leads to a surplus. C) has no effect. D) shifts the demand curve leftward.
The first term in an NPV calculation is usually
A) positive, because firms consider only positive returns. B) positive, because interest charges do not accrue until the second period. C) zero, because interest charges do not accrue until the second period. D) negative, because funds for the project have to be borrowed up front before it is begun. E) negative, because the cost of the project is immediate, but revenue streams from the project come later.
The Federal Trade Commission is charged with
a. supervising cartels in the United States b. aiding small business in contract negotiations with foreign companies c. investigating unfair and deceptive trade practices d. approving contracts between businesses and government e. bringing criminal complaints
Although Denmark currently pegs its krona to the euro successfully, it has not joined the currency union. All of the following are reasons, EXCEPT:
A) with a peg, the Danish monetary authority has the option to exercise control over the exchange rate in the future if needed. B) Denmark has an additional option to abandon its peg to the euro if required to maintain stability. C) Denmark has the option to conduct monetary policy if it chooses. D) if Denmark gave up its krona and adopted the euro, it could always easily go back to the krona if needed to preserve monetary autonomy.