The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1
- Refer to Table 11.1.If firm Y follows its dominant strategy and firm X does not then:
A)firm X earns $150 and firm Y earns $200.
B)firm X earns $50 and firm Y earns $200.
C)firm X earns $150 and firm Y earns $180.
D)firm X earns $50 and firm Y earns $100.
E)firm X earns $150 and firm Y earns $100.

Question

The following table shows the payoff matrix of the two firms (Firm X and Firm Y) in dollars when they advertise and when they do not advertise. Table 11.1 
- Refer to Table 11.1.If firm Y follows its dominant strategy and firm X does not then:
A)firm X earns $150 and firm Y earns $200. 
B)firm X earns $50 and firm Y earns $200. 
C)firm X earns $150 and firm Y earns $180. 
D)firm X earns $50 and firm Y earns $100. 
E)firm X earns $150 and firm Y earns $100.

Quizplus · Accepted Answer

Firm Y will choose its dominant strategy to maximize its payoff, which results in firm Y earning $200. If firm X does not follow its dominant strategy, it earns $50.

The Following Table Shows the Payoff Matrix of the Two