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Two cigarette manufacturers (Firm A and Firm B) are faced with lawsuits from provinces to recover the health-care related expenses associated with cigarette smoking. Both
Two cigarette manufacturers (Firm A and Firm B) are faced with lawsuits from provinces to recover the health-care related expenses associated with cigarette smoking. Both cigarette firms have evidence that indicates that cigarette smoke causes lung cancer (and other related illnesses). Provincial 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 their liability in the suit if they cooperate with attorneys representing the provinces. Firm A Concede that Argue that there is no cigarette smoke evidence that smoke causes causes lung cancer Cancer Concede that Firm B cigarette smoke Firm A loss = -$20 Firm A loss = -$50 causes lung cancer Firm B loss = -$15 Firm B loss = -$5 Argue that there is no evidence that Firm A loss = -$5 Firm A loss = -$10 smoke causes cancer Firm B loss = -$50 Firm B loss = -$10 Refer to Table 17-3. If both firms follow a dominant strategy, what will Firm A's profits (losses) be? a) -$50 Ob) -$20 O c) -$10 O d) - $5
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