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Consider two strategically depdentant firms and their decision to advertise. If both forms advertise, Firm A makes $10mil in profits and Firm B makes $5mill. If neither advertise, Firm A makes $10m and Firm B makes $2m. If Firm A advertises and firm B does not, Firm A makes $15 and Firm B makes $0. and If Firm A does not advertise and Firm B does, Firm A earns  $6m and Firm B earns $8m

a.) Determine and clearly report the pay-off matrix for this game

b.) THhen determine if each firm has a dominant strategy; why or why not; explain

c.) Then explain what each firm will do (Advertise or not) decide what the overall solution is. What is the value of profits for each firm?

Microeconomics, Economics

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