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Two Men's Clothing Stores That Compete for Most of the Market

Question 40

Multiple Choice

Two men's clothing stores that compete for most of the market in a small town in Ohio must choose their advertising levels simultaneously. The following payoff table facing the two firms, Arbuckle & Son and Mr. B's, shows the weekly profit outcomes for the various advertising decision combinations. Use this payoff table to answer Questions .
Mr: B’s aavertisinglevel Arbuckle & Son advertising level High  Low HighAB$4,000,$4,000$3,000,$5,000LowCD$5,000$3,000$3,500,$3,500\begin{array} { l } &\text {Mr: B's aavertisinglevel }\\ \text {Arbuckle \& Son advertising level }&\begin{array}{l|l|l|}& \text {High }& \text { Low }\\\hline High &\mathrm{A}&\mathrm{B}\\& {\$ 4,000, \$ 4,000} &{\$ 3,000, \$ 5,000} \\\hline Low &\mathrm{C}&\mathrm{D}\\&{\$ 5,000} \$ 3,000 & {\$ 3,500, \$ 3,500} \\\hline\end{array}\\\end{array}
-Mr. B's


A) has a dominant strategy: choose a high level of advertising.
B) has a dominant strategy: choose a low level of advertising.
C) has a dominated strategy: choose a low level of advertising.
D) has no dominated strategy
E) both a and c.

Correct Answer:

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