Table 16-6
Two pita-bread stores (Pita Pan and Pita Wrapbit) have both recently opened up in a new suburb and are interested in expanding their market share.Both are considering advertising in the surrounding area to entice more customers to come to their stores.The following table depicts the strategic outcome that results from the game.The profits of the two pita-bread stores under two advertising scenarios are shown.
-Refer to Table 16-6.The dominate strategies of Pita Pan and Pita Wrapbit are:
A)Advertise and Do Not Advertise, respectively
B)both Advertise
C)Do Not Advertise and Advertise, respectively
D)both Do Not Advertise

Question

Table 16-6
Two pita-bread stores (Pita Pan and Pita Wrapbit) have both recently opened up in a new suburb and are interested in expanding their market share.Both are considering advertising in the surrounding area to entice more customers to come to their stores.The following table depicts the strategic outcome that results from the game.The profits of the two pita-bread stores under two advertising scenarios are shown. 
-Refer to Table 16-6.The dominate strategies of Pita Pan and Pita Wrapbit are:
A)Advertise and Do Not Advertise, respectively 
B)both Advertise 
C)Do Not Advertise and Advertise, respectively 
D)both Do Not Advertise

Quizplus · Accepted Answer

In a dominant strategy equilibrium, each player's strategy is optimal regardless of what the other player does. If both firms advertising leads to a better payoff for each, regardless of the other's action, then both advertising is the dominant strategy.

Table 16-6 Two Pita-Bread Stores (Pita Pan and Pita Wrapbit) Have Both