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The Numbers in Each Cell Are Each Firm's Profits Refer to the Figure Above

Question 40

Multiple Choice

The numbers in each cell are each firm's profits.  Column Cafe  Row Restaurant  Publish Coupons in  Student Paper  No Coupons  Publish Coupons in  Row: 25,  Row: 200,  Student Paper  Column: 25  Column: 10  No Coupons  Row: 10,  Row: 120,  Column: 200  Column: 120 \begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Column Cafe }\\\text { Row Restaurant }\begin{array}{|l|l|l|}\hline & \begin{array}{l}\text { Publish Coupons in } \\\text { Student Paper }\end{array} & \text { No Coupons } \\\hline \text { Publish Coupons in } & \text { Row: 25, } & \text { Row: 200, } \\\text { Student Paper } & \text { Column: 25 } & \text { Column: 10 } \\\hline \text { No Coupons } & \text { Row: 10, } & \text { Row: 120, } \\& \text { Column: 200 } & \text { Column: 120 } \\\hline\end{array}\end{array}
Refer to the figure above.The payoffs of this game are such that:


A) if Row Restaurant expects that Column Cafe will choose its dominant strategy,Row should choose to not follow its own dominant strategy.
B) profits at both firms would be highest if both firms follow their dominant strategies.
C) both firms would benefit from a law that made publishing coupons illegal.
D) an agreement to not publish coupons would be stable because with these profits neither firm has an incentive to defect.

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