Megafirm Is the Only Provider of Products in the Seven

Megafirm is the only provider of products in the Seven Corners region,a sparsely populated area out west.It currently has a small distribution center and two retail outlets.Gigafirm has threatened to open a competing business in the Seven Corners region.Megafirm has publicly stated that,if Gigafirm comes in,Megafirm will flood the market with goods,driving down prices and forcing Gigafirm out.Suppose that expansion would cost the firm $100,000 and that Megafirm's profits are $1,000,000 per year when it is the only firm in the region regardless of whether it expands or not.Both firms would earn $350,000 if Gigafirm entered and Megafirm remained a small operation,and both would earn -$100,000 if Gigafirm entered and Megafirm expanded.
Megafirm should

A) stop making empty threats because it undermines its credibility.
B) expand immediately because it is a costly to fake signal that it will carry out its threat.
C) accept Gigafirm's entry and a profit of $350,000,saving expansion costs.
D) take out television ads announcing its expansion,whether or not it intends to follow through on those plans.