Question

Firm B Keep agreement Break agreement Firm A Keep agreement Firm A profit = $50 Firm B profit = $50 Firm A profit = $100 Firm B profit = $5 Break agreement Firm A profit = $5 Firm B profit = $100 Firm A profit = $10 Firm B profit = $10 Given the matrix above, which of the following is correct? Group of answer choices Firm A’s dominant strategy is to break the agreement, and Firm B’s dominant strategy is to break the agreement Firm A’s dominant strategy is to keep the agreement, and Firm B’s dominant strategy is to break the agreement Firm A’s dominant strategy is to keep the agreement, and Firm B’s dominant strategy is to keep the agreement Firm A’s dominant strategy is to break the agreement, and Firm B’s dominant strategy is to keep the agreement

Answer 1

Correct option is A. The given statement is true.

Firm A’s dominant strategy is to break the agreement, and Firm B’s dominant strategy is to break the agreement