Figure 14-5 a Few Years Ago Netflix (N) Pioneered

Figure 14-5 A few years ago Netflix (N) pioneered an online DVD rental service. Blockbuster (B) , a brick and mortar DVD/video rental company, waited until Netflix had been in business for over a year before deciding whether to establish its own online rental service. At this point, Netflix had to decide whether or not to lower its subscription price in order to deter Blockbuster's entry into the market. Figure 14-5 shows the decision tree for the Netflix-Blockbuster entry game.
-Refer to Figure 14-5. Does it make sense for Netflix to lower its price in order to deter Blockbuster's entry into the online DVD rental market?

A) Yes, because Netflix stands to make a profit of $7 million by lowering its price and keeping Blockbuster out of the market.
B) No, because Netflix will make a higher profit by keeping its subscription price unchanged, whether Blockbuster enters the market or not.
C) Yes, because it is always profitable to remain a monopoly.
D) No, because Blockbuster will enter the market regardless of Netflix's decision about its subscription price.