3. Refer to the scenario above. Does Mello Yello have a dominant strategy? a) No

Question

3. Refer to the scenario above. Does Mello Yello have a dominant strategy?

a) No.
b) Yes. Regardless of whether Mountain Dew chooses to advertise, Mello Yello's profits are always highest if it advertises.
c) Yes. Regardless of whether Mountain Dew chooses to advertise, Mello Yello's profits are always highest if it does not advertise.
d) Not enough information is provided to answer the question.

Advertising Game: Mountain Dew -Mello Yello Structure of Payoffs Profit numbers are cents per can) (MD profits per can, MY Mello-Yello Don't Advertise 15, 0 10, 2 Advertise profits per can) |Advertise10, Mountairn Dew Don't Advertise 5 6 8

Explanation / Answer

3.b yes regardless of whether Mountain Dew chooses to advertise, Mello Yello's profits are always highest if it advertises.

Reason-

A dominant strategy is the one which the player chooses regardless of what the other player chooses, because it always gives the higher payoff.

When mountain dew chooses to advertise, it is best for Mello Yello to advertise than to not advertise as 5>0

When mountain dew chooses to not advertise, it is best for Mello Yello to advertise than to not advertise as 8>2

That means the best response for mello yello is to always advertise. Hence, it becomes its dominant strategy.

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