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[l [ 3.(04.05HC) Mako and Productux are the only suppliers of the good Balora, a good with no substitutes. The following payoff matrix shows the
[l [ 3.(04.05HC) Mako and Productux are the only suppliers of the good Balora, a good with no substitutes. The following payoff matrix shows the estimated profits if each company advertises or not. Productux Advertise Not Advertise Mako Advertise $50,855 25,875 Not Advertise $75,825 $20,$15 a. Does Mako have a dominant strategy to advertise, not advertise, or no dominant strategy? b. Does Productux have a dominant strategy to advertise, not advertise, or no dominant strategy? c. Identify any Nash equilibria in the payoff matrix. d. Advertising costs decrease by $30. Draw a new payoff matrix reflecting the change. e. Assuming no cooperation, what will the profit be for each company after the decrease in advertising costs? (5 points)
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