Consider the following game in which two firms decide how much of a ho

Consider the following game in which two firms decide how much of a homogeneous good to produce.

The annual profit payoffs for each firm are stated in the cell of the game matrix, and Firm A’s payoffs appear first in the payoff pairs: Firm B – low output Firm B – high output Firm A – low output 300, 250 200, 100 Firm A – high output 200, 75 75, 50 What are the dominant strategies in this game? A) Both firms produce low levels of output
B) Both firms produce high levels of output
C) Firm A’s dominant strategy is to produce low levels of output, but Firm B does not have a dominant strategy.
D) Firm B’s dominant strategy is to produce low levels of output, but Firm A does not have a dominant strategy.
E) Neither firm has a dominant strategy

ANSWER

A