Coke and Pepsi are in a market together in which they can each make the following sequence of moves. First, Coke decides whether to launch a SPORTS drink or an ENERGY drink. Second, Pepsi observes Coke's choice then chooses SPORTS and ENERGY. If ENERGY is chosen by both firms, Coke gets 20 and Pepsi 60. If Coke chooses ENERGY and Pepsi SPORTS the payoffs are 50 and 30 to Coke and Pepsi, respectively. If Coke opts for SPORTS and Pepsi opts for ENERGY the payoffs are 50 and 30 to Coke and Pepsi. Finally, if both choose SPORTS the payoffs are 30 to Coke and 50 to Pepsi. In the subgame perfect (or credible) equilibrium, what do we observe each firm do? ● Coke opts for ENERGY and Pepsi SPORTS. ● Coke opts for SPORTS and Pepsi ENERGY ● Coke opts for SPORTS and Pepsi SPORTS ● Coke opts for ENERGY and Pepsi ENERGY None of above.

Coke and Pepsi are in a market together in which they can each make the following sequence of moves. First, Coke decides whether to launch a SPORTS drink or an ENERGY drink. Second, Pepsi observes Coke's choice then chooses SPORTS and ENERGY. If ENERGY is chosen by both firms, Coke gets 20 and Pepsi 60. If Coke chooses ENERGY and Pepsi SPORTS the payoffs are 50 and 30 to Coke and Pepsi, respectively. If Coke opts for SPORTS and Pepsi opts for ENERGY the payoffs are 50 and 30 to Coke and Pepsi. Finally, if both choose SPORTS the payoffs are 30 to Coke and 50 to Pepsi. In the subgame perfect (or credible) equilibrium, what do we observe each firm do? ● Coke opts for ENERGY and Pepsi SPORTS. ● Coke opts for SPORTS and Pepsi ENERGY ● Coke opts for SPORTS and Pepsi SPORTS ● Coke opts for ENERGY and Pepsi ENERGY None of above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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