Problem
1. Evaluate the following statement: "A cartel will put an end to price war, which is a barbaric form of competition that benefits no one."
2. Assume the payoff matrix in Exhibit 9.5 applies to spending for advertising rather than airline fares. Substitute "Don't advertise" for "High fare" and "Advertise" for "Low fare." Assume the same profit and loss figures in each cell, but substitute "Marlboro" for "US Airways," and "Camel" for "American Airlines." Explain the dynamics of the model and why cigarette companies might be pleased with a government ban on all cigarette advertising.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.