Scenario 1:Two cigarette manufacturers (Firm A and Firm B) are faced with lawsuits from states to recover the healthcare related expenses associated with cigarette smoking.Both cigarette firms have evidence that indicates that cigarette smoke causes lung cancer and other illnesses.State prosecutors do not have access to the same data used by cigarette manufacturers and thus will have difficulty recovering full costs without the help of at least one cigarette firm study.Each firm has been presented with an opportunity to lower its liability in the suit if it cooperates with the attorneys representing the states.However, cooperation will also lead to negative publicity for the firm.The matrix below summarizes the firms' payoffs in terms of lost profits in millions of dollars conditional on the two firms' actions.

21.Pursing its best interests, Firm A will cooperate with attorneys and concede that cigarette smoking causes lung cancer:

A. Only if Firm B also cooperates with state attorneys.

B. Only if Firm B refuses to cooperate with state attorneys.

C. Regardless of whether Firm B cooperates or refuses.

D. None of the above. In pursuing its own best interests, Firm A will in no case cooperate with attorneys.

22. Refer to Scenario 1. If both firms follow their dominant strategy, Firm A's profits (losses) will be:

A.-$50 million.

B.-$20 million.

C. -$10 million.

D.-$5 million.

its in millions of dollars conditional on the two firms Firm B Cooperate Refuse to with Attorneys Cooperate Firm A Cooperate -20; -15 -50; -5 with Attorneys Refuse to Cooperate -5; -50 -10; - 10