The Firms Shown in the Following Table Wish to Increase

Essay

The firms shown in the following table wish to increase their sales by either advertising or decreasing their price. What is the optimal strategy for each form according to the table, with DEF's payoff listed in the top row of each outcome?
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad {\text { ABC, Inc. }} \\\begin{array}{llll} & & \text { Advertise } & \text { Cut price } \\& \text { Advertise } & \$ 1.0 \mathrm{M} & \$ 0.5 \mathrm{M} \\\text { DEF, Inc. } & & \$ 1.0 \mathrm{M} & \$ 2.0 \mathrm{M} \\& \text { Cut price } & \$ 2.0 \mathrm{M} & \$ 0.75 \mathrm{M} \\& & \$ 0.5 \mathrm{M} & \$ 0.75 \mathrm{M}\end{array}\end{array}$