In January 2011, Coca-Cola and Pepsi Agreed to Reduce Their

In January 2011, Coca-Cola and Pepsi agreed to reduce their yearly advertising budgets by $1 million each, and neither firm reneged on the agreement throughout the year. In January 2012, Coca-Cola and Pepsi each announced that their company 2011 profits had increased by $1 million. Which of the following is a likely explanation for this increase?

A) A new entrant in the market caused Coca-Cola and Pepsi to lose substantial market share.
B) The government imposed a punitive tax on both firms for producing a beverage that is a danger to public health.
C) The firms had previously been in a prisoner's dilemma situation where one firm's advertisements were effectively canceling the other firm's advertisements.
D) Coca-Cola drastically reduced the price of its soda relative to the price of Pepsi's soda.
E) Pepsi drastically reduced the price of its soda relative to the price of Coca-Cola's soda.