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.The game in the figure shown is a version of:
A. the first-mover advantage.
B. the prisoner's dilemma.
C. a sequential game.
D. a repeated game.
Answer: C
You might also like to view...
What immediate consequence does an increase in education time have in the endogenous growth model with human capital?
A) lower output B) lower output in the future C) lower wages D) lower human capital
Successful collusion requires all of the following except
a. a monopoly market with strong barriers to entry b. all firms cooperate, none cheat c. all firms belong to the same industry d. collusion will be more profitable than non-collusion e. the government does not interfere
Assuming a 5 percent rate of interest, the present value of a business that generates an annual income of $20,000 is worth
a. $1,000 b. $20,000 c. $400,000 d. $80,000 e. $100,000
The trade deficit is the mirror image of required capital inflows
a. True b. False Indicate whether the statement is true or false