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    The figure below shows a payoff table for two firms, A and B. Which strategy is a dominant strategy for Firm A? Firm B?

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    #56 The figure below shows a payoff table for two firms, A and B. Which strategy is a dominant strategy for Firm A?

    A) Strategy I
    B) Strategy II
    C) Strategy III
    D) Strategy IV
    E) None of the strategies available to firm A is a dominant strategy

    #57 Which strategy is a dominant strategy for Firm B?

    A) Strategy I
    B) Strategy II
    C) Strategy III
    D) Strategy IV
    E) None of the strategies available to firm B is a dominant strategy

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    56. FIRM A

    The answer is B.

    See cells A and C. The payoff that Firm A gets, when Firm B plays III is $300 if Firm A plays I or $600 if Firm A plays II. Which payoff is greater for Firm A? Obviously for Firm A it is $600. Hence, if Firm B plays III, then Firm A will prefer to play II.

    Now, in order for this to be the dominant strategy playing II ...

    Solution Summary

    Which strategy is a dominant strategy for Firm A?

    $2.19