Find firm that advertises will earn and non-advertising firm


If you advertise and your rival advertises, you each earn $4 million in profits. If neither of you advertise, 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 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 above is true.

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Microeconomics: Find firm that advertises will earn and non-advertising firm
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