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Answer to Question #52967 in Microeconomics for Yana

Question #52967
FIRM A
Concede that Argue that there is no evidence
smoke causes cancer that it causes cancer
Concede that Firm A profits: - $20 bill. Firm A profits: -$50 bill.
smoke Firm B profits: -$20 bill. Firm B profits: -$10 bill.
causes cancer
FIRM B
Argue that there is Firm A profits: -$10 bill. Firm A profits: -$15 bill.
no evidence that Firm B profits: -$50 bill. Firm B profits: -$15 bill.
it causes cancer
If both firms follow a dominant strategy, Firm A's profits (losses) will be?
Expert's answer
Firm A profits: - $20 bill. Firm A profits: -$50 bill. 
smoke causes cancer 
Firm B profits: -$20 bill. Firm B profits: -$10 bill.
Firm A profits: -$10 bill. Firm A profits: -$15 bill.
no evidence that 
Firm B profits: -$50 bill. Firm B profits: -$15 bill.
If both firms use their dominant strategy, then firm A will receive profit (loss) of  -$50 bill.

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