QUESTION 4 Consider the decision tree below. This tree illustrates hypothetical payoffs to General Mills (GM) and Quaker Oats (Q) if they engage in a price war. GM Cut price No price cut Cut price No price cut GM, $3 million/year Q = $3 million/year GM, $10 million/year Q = $2 million/year GM = $5 million/year Q = $5 million/year If GM cuts prices, the greatest potential gain is: O a. $5 million per year O b. $10 million per year O c. $2 million per year Od. $3 million per year O e. none of the above
QUESTION 4 Consider the decision tree below. This tree illustrates hypothetical payoffs to General Mills (GM) and Quaker Oats (Q) if they engage in a price war. GM Cut price No price cut Cut price No price cut GM, $3 million/year Q = $3 million/year GM, $10 million/year Q = $2 million/year GM = $5 million/year Q = $5 million/year If GM cuts prices, the greatest potential gain is: O a. $5 million per year O b. $10 million per year O c. $2 million per year Od. $3 million per year O e. none of the above
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![QUESTION 4
Consider the decision tree below. This tree illustrates hypothetical payoffs to General Mills (GM) and Quaker Oats (Q) if they
engage in a price war.
GM
Cut price
No
price cut
Cut price
No
price cut
GM₁ = $3 million/year
Q = $3 million/year
GM = $10 million/year
Q = $2 million/year
GM = $5 million/year
Q = $5 million/year
If GM cuts prices, the greatest potential gain is:
a. $5 million per year
b. $10 million per year
c. $2 million per year
Od. $3 million per year
e. none of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5a1d79ee-47b5-4f59-9c91-ef88ab29a561%2Fbccde0e8-f727-40ca-85bb-77b99408f1f5%2Fehsvuie_processed.png&w=3840&q=75)
Transcribed Image Text:QUESTION 4
Consider the decision tree below. This tree illustrates hypothetical payoffs to General Mills (GM) and Quaker Oats (Q) if they
engage in a price war.
GM
Cut price
No
price cut
Cut price
No
price cut
GM₁ = $3 million/year
Q = $3 million/year
GM = $10 million/year
Q = $2 million/year
GM = $5 million/year
Q = $5 million/year
If GM cuts prices, the greatest potential gain is:
a. $5 million per year
b. $10 million per year
c. $2 million per year
Od. $3 million per year
e. none of the above
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