Starbucks and Krispy Kreme are trying to decide whether or not to open a shop in the new Mall of Africa. They both prefer if the other firm opens a shop because they can draw bigger crowds but neither wants to be the only American-branded coffee shop in the Mall. The payoff matrix for this dilemma is below. Krispy Kreme Open Don't Open Starbucks Open (i) (ii) 5.5 2,6 Don't open (iii) (iii) 6,2 3.3 MCQ question 4 Find the Nash Equilibrium (Starbucks, Krispy Kreme) for the payoff matrix when the game is played simultaneously. A. (5;5) only. OB. (6,2) only. OC. (2,6) only OD. (3,3) only O E. There is no stable Nash Equilibrium.

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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Starbucks and Krispy Kreme are trying to
decide whether or not to open a shop in
the new Mall of Africa. They both prefer if
the other firm opens a shop because they
can draw bigger crowds but neither wants
to be the only American-branded coffee
shop in the Mall. The payoff matrix for this
dilemma is below.
Krispy Kreme
Open Don't Open
Starbucks
Open (i)
(ii)
5.5
2,6
Don't open
(iii)
(iii)
6,2
3.3
MCQ question 4
Find the Nash Equilibrium (Starbucks,
Krispy Kreme) for the payoff matrix when
the game is played simultaneously.
A. (5;5) only.
OB. (6,2) only.
OC. (2,6) only
OD. (3,3) only
O E. There is no stable Nash Equilibrium.
Transcribed Image Text:Starbucks and Krispy Kreme are trying to decide whether or not to open a shop in the new Mall of Africa. They both prefer if the other firm opens a shop because they can draw bigger crowds but neither wants to be the only American-branded coffee shop in the Mall. The payoff matrix for this dilemma is below. Krispy Kreme Open Don't Open Starbucks Open (i) (ii) 5.5 2,6 Don't open (iii) (iii) 6,2 3.3 MCQ question 4 Find the Nash Equilibrium (Starbucks, Krispy Kreme) for the payoff matrix when the game is played simultaneously. A. (5;5) only. OB. (6,2) only. OC. (2,6) only OD. (3,3) only O E. There is no stable Nash Equilibrium.
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