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Two firms in a duopoly are considering whether to advertise. Each firm will be affected by its Firm B competitor's decision. Their corresponding payoff matrix

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Two firms in a duopoly are considering whether to advertise. Each firm will be affected by its Firm B competitor's decision. Their corresponding payoff matrix is shown to the right. Advertise Don't Assume that each firm knows the payoff matrix and believes that the other firm will act in its Advertise own interest. Advertise 20, 10 30, 0 What is Firm A's dominant strategy? Firm A Don't 12, 16 20, 4 Advertise Firm A's dominant strategy is What is Firm B's dominant strategy? Firm B's dominant strategy is What will be the equilibrium policies if each firm acts rationally to maximize its welfare? The equilibrium is O A. for Firm A to advertise and for Firm B to not advertise. O B. for Firm A to advertise and for Firm B to advertise. O C. for Firm A to not advertise and for Firm B to not advertise. O D. for Firm A to not advertise and for Firm B to advertise. O E. none of the above

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