Two major producers of beer in North and Propeller. If both companies spend only a small amount on advertising, profits will be $600,000 for North and $300,000 for Propeller. If both greatly increase their advertising budgets, they will reach new customers, but their costs will be so high that profits will be just $800,000 for North and $400,000 for Propeller. If only North pursues a strong advertising strategy, it will be able to steal some of Propeller's customers, allowing North to earn $1.4 million and Propeller to earn $300,000. However, if only Propeller advertises aggressively, it will earn $500,000 and NOrthn will earn $600,000.

Show this situation in a payoff matrix.

What is the cooperative outcome in this game? Is it likely to be achievable? Explain.

What is Garrison's dominant strategy? Explain.

What is Propeller's dominant strategy? Explain.

What is the non-cooperative outcome in this game? Is it a Nash equilibrium?

Is this an example of a prisoner's dilemma? Explain.