1) Consider following pay-off matrix, showing monthly profit in thousands of dollars. The two firms compete a in a fast-food environment in which two strategies are considered: Strategy one (S1) is low price and little advertising; S2 is high price, heavy advertising. The first number in each cell represents profit for McD.

a) Does McD have a dominant strategy? If yes, what is it?

b) Does BK have a dominant strategy? If yes, what is it?

c) Is there a Nash equilibrium? Explain.