Multiple Choice
If you advertise and your rival advertises, you each will earn $4 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $1 million and the non-advertising firm will earn $5 million. Which of the following is true?
A) A dominant strategy for firm A is to advertise.
B) A dominant strategy for firm B is to advertise.
C) A Nash equilibrium is for both firms to advertise.
D) None of the answers is correct.
Correct Answer:
Verified
Correct Answer:
Verified
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