This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts. Both companies are trying to decide whether or not to expand in an area. The area can handle only one of them expanding, and whoever expands will cause the other to lose some business. If they both expand, the market will be saturated, and neither company will do well. The payoffs are the additional profits (or losses) they will earn.According to the figure shown, Starbucks:
A. has first-mover advantage.
B. should wait to see what Dunkin Donuts is going to do.
C. has a dominant strategy not to expand.
D. has a dominant strategy to expand.
Answer: A
You might also like to view...
Explain the income and substitution effects of an increase in the price of one good on an individual's consumption choice
What will be an ideal response?
The rational expectations school advocates: a. Monetarism
b. Keynesianism. c. the use of fiscal policy. d. the use of monetary policy. e. a passive approach to policy.
Which of the following is not a supply-side measure?
a) Increased training b) Providing more information c) Helping individuals to move location to find work d) Increasing spending on existing industries
Place point A on the graph to indicate where the United States economy operated in 1938.
