In a competitive market, if Firm A's pricing strategy is to always undercut its competitors to maximize its profits, how does this relate to dominant strategies? A: Firm A's strategy is to maximize profit regardless of competitors' prices :: B: Firm A's strategy is dependent on competitors' reactions :: C: Firm A's strategy is based on historical pricing trends :: D: Firm A's strategy is irrelevant to market dynamics.

In a competitive market, if Firm A chooses to always lower its prices to outdo competitors, this approach relates to dominant strategies because it depends heavily on how competitors respond. This means that Firm A's strategy is not solely about maximizing profit independently; instead, it is influenced by the actions of other firms in the market. If competitors also lower their prices, Firm A may not achieve higher profits as intended. For example, if Firm A sells a product for $10 while competitors price theirs at $12, it gains customers, but if all firms drop their prices to $9, Firm A's profits could decrease. Therefore, the correct answer is B, as Firm A's strategy relies on the reactions of its competitors.