In the market for video gameconsoles, Microsoft and Sony are essentially aduopoly, with Nintendo at a distant third. Consider a purely hypothetical game in which the executives of the two companies are deciding how much they will spend on advertising. Tosimplify, assume that they can either spend a lot or spend a little. If both firms spend alot, Sony's hypothetical profit will be $2 billion andMicrosoft's hypothetical profit will be $1 billion. If they both spend alittle, Sony's profit will be $9 billion andMicrosoft's profit will be $7 billion. If Sony spends a lot and Microsoft spends alittle, Sony's profit will be $8 billion andMicrosoft's profit will be $2 billion.Finally, if Sony spends a little and Microsoft spends alot, Sony's profit will be $3 billion andMicrosoft's profit will be $6 billion.

Create the payoff matrix for this game.

Does Sony have a dominant strategy? If so, what is it? Does Microsoft have a dominant strategy? If so, what is it?

What is the Nash equilibrium of the game?