Question: 1. (5 points) Assume that this is a simultaneous move one shot game, i.e., each player moves simultaneously, and the game is played once. Two

1. (5 points) Assume that this is a simultaneous move one

1. (5 points) Assume that this is a simultaneous move one shot game, i.e., each player moves simultaneously, and the game is played once. Two fu'ms compete by advertising, and you are given the prot matrix for the advertising game. The mnnbers in the table show the prot for each rm from each outcome Do Not Advertise Advertise (a) What is each rm's best response to its rival's possible actions? (i) If Firm 1 does not advertise what is Firm 2's best action? (ii) [an 1 advertises what is Firm2's best action? {iii} IfFirm 2 does not advertise what is Firm 1's best action? (iv) Ifan 2 advertises what is Firm l's best action? (b) What is Firm 1's dominant strategy (if they have one)? (c) What is Firm 2's dominant strategy (if they have one)? 2. (5 points) Assume that this is a simultaneous move, one shot game, i.e., each player moves simultaneously, and the game is played once. The two rms face the following prot matrix. The number in the table show the prot for each rm 'onl each outcome (a) What is the Nash equilibrium for this game? (b) Ifthese two rms were able to collude (negotiate) what outcome would they settle on? (c) What is Firm 1's secure strategy? (d) What is Firm 2's secure strategy

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