If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Which of the following is true?
A. A dominant strategy for firm B is to advertise.
B. A Nash equilibrium is for both firms to advertise.
C. A dominant strategy for firm A is to advertise.
D. All of the statements associated with this question are correct.
Answer: D
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