The market for cigarettes in a country is dominated completely by two firms, Chokoe Ltd and Fumed Lungs Ltd. The market size is fixed at $8 billion. Each firm can choose whether to advertise or not....

The market for cigarettes in a country is dominated completely by two firms, Chokoe Ltd and Fumed Lungs Ltd. The market size is fixed at $8 billion. Each firm can choose whether to advertise or not. Advertising costs $1 billion for each firm that advertises. If one firm advertises and the other does not, then the firm advertising captures the whole market. If both firms advertise, they split the market 50:50 and pay for their respective advertising. If neither advertises, they split the market 50:50 but without the expense of advertising. a Draw a game table to describe this game. b What strategy would you advise Fumed Lungs Ltd to follow? c What would you predict will be the strategy chosen by each firm? d Is there an outcome that would make both firms better off? Why aren’t they able to achieve this outcome?