Oligopoly/Game Theory-- Questions 21-25 refer to Table 6-1 below.Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested inexpanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategicoutcomes that result from the game. Increases in annual profits of the two home-improvement stores are shown in the table below.Table 6-1Profits for Lopes & HomeMax under different strategiesLopesIncrease the size of storeDo not increase the size ofand parking lotstore and parking lotLopes $1.0 millionHomeMax - $1.5 millionLopes - $0.4 millionHomeMax = $3.4 millionIncrease the size of store andparking lotHomeMaxLopes $3.2 millionHomeMax = $0.6 millionLopes $2.0 millionHomeMax - $2.5 millionDo not increase the sizeof store and parking lot Question 24Refer to Table 6-1 in Question 21. If both stores follow a dominant strategy annual profit will grow by.$1.5 million for HomeMax and by $1.0 million for Lopes.O $3.4 million for HomeMax and by $0.4 million for Lopes.O $0.6 million for HomeMax and by $3.2 million for Lopes.$2.5 million for HomeMax and by $2.0 million for Lopes.

A dominant strategy is one which a player chooses irrespective of what the others player chooses.

Refer to Table 6-1 in Question 21. If both stores follow a dominant strategy annual profit will grow by.. O $1.5 million for HomeMax and by $1.0 million for Lopes. O $3.4 million for HomeMax and by $0.4 million for Lopes. O $0.6 million for HomeMax and by $3.2 million for Lopes. O $2.5 million for HomeMax and by $2.0 million for Lopes.

Refer to Table 6-1 in Question 21. If both stores follow a dominant strategy annual profit will grow by.. O $1.5 million for HomeMax and by $1.0 million for Lopes. O $3.4 million for HomeMax and by $0.4 million for Lopes. O $0.6 million for HomeMax and by $3.2 million for Lopes. O $2.5 million for HomeMax and by $2.0 million for Lopes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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