Final answer:
Based on the payoff matrix, if ThirstQ holds its advertising budget to the normal level, 2Cool could improve its outcome by expanding its output. It is true.
Step-by-step explanation:
Based on the payoff matrix, 2Cool could improve its outcome if ThirstQ holds its advertising budget to the normal level. In a prisoner's dilemma scenario, both firms have the option to hold down their output or raise their output. If ThirstQ holds its advertising budget to the normal level, it indicates that they may hold down their output. In this case, 2Cool can earn higher profits by expanding its output, resulting in a better outcome.
In the broader context of advertising strategy, the principle observed by economist A.C. Pigou asserts that competing firms' advertising expenditures may neutralize each other, leaving them no better off than if no advertising had occurred. This explains why the pursuit of individual benefit in business can sometimes undermine the collective best outcome.