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Scenario 13.9 Consider the Following Game

Question 105

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Scenario 13.9
Consider the following game:
Two firms are situated next to a lake, and it costs each firm $1,500 per period to use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The cost to each firm of dealing with water from a polluted lake is $1,000 times the number of polluting firms. Scenario 13.9 Consider the following game: Two firms are situated next to a lake, and it costs each firm $1,500 per period to use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The cost to each firm of dealing with water from a polluted lake is $1,000 times the number of polluting firms.   -What is true about dominant strategies in the game in Scenario 13.9? A)   Pollute  is a dominant strategy for both firms. B)   Pollute  is a dominant strategy for Lago only. C)   Don't Pollute  is a dominant strategy for both firms. D)   Don't Pollute  is a dominant strategy for Lago only. E)  There are no dominant strategies.
-What is true about dominant strategies in the game in Scenario 13.9?


A) "Pollute" is a dominant strategy for both firms.
B) "Pollute" is a dominant strategy for Lago only.
C) "Don't Pollute" is a dominant strategy for both firms.
D) "Don't Pollute" is a dominant strategy for Lago only.
E) There are no dominant strategies.

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