Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and Friendly Flyers are looking to enter that morket (They are the only two.) The figure shows in extensive form the possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss) the firm will realize from its decision. What does this extensive form game Indicate about the decision to enter the South Podunk market? Accommodating Airlines (AA Moves First Friendly Flyen (FF Move Second Profits (AA FF) Enter A (R, 5) Enter FF Don't Enter C12. 0 Enter AA 8(0, 10) Don't Enter Don't Enter D(Q, 0) Multiple Choice Both airlines are better off by entering this market The outcome of this game is a prisoner's dilemma Accommodating Airlines has a first mover advantage in this game Friendly Flyers has a first-mover advantage in this game

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and
Friendly Flyers are looking to enter that morket (They are the only two.) The figure shows in extensive form the
possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss) the
firm will realize from its decision. What does this extensive form game Indicate about the decision to enter the South
Podunk market?
Accommodating
Airlines (AA)
Moves First
Friendly
Flyers (FF)
Move Second
Profits (AA FF)
Enter
A (8, 5)
Enter
FF
Don't Enter
C 12. 0)
AA
Enter
8 (0, 10)
Don't Enter
FF2
Don't Enter
D (0, 0)
Multiple Choice
Both airlines are better off by entering this market
The outcome of this game is a prisoner's dilemma.
O Accommodating Airlines has a first-mover advantage in this game.
Friendly Flyers has a first-mover advantage in this game.
Transcribed Image Text:Suppose that currently there are no airlines serving the city of South Podunk. Both Accommodating Airlines and Friendly Flyers are looking to enter that morket (They are the only two.) The figure shows in extensive form the possible outcomes of the two firms' decisions. The payoffs represent, in thousands per month, the profit (or loss) the firm will realize from its decision. What does this extensive form game Indicate about the decision to enter the South Podunk market? Accommodating Airlines (AA) Moves First Friendly Flyers (FF) Move Second Profits (AA FF) Enter A (8, 5) Enter FF Don't Enter C 12. 0) AA Enter 8 (0, 10) Don't Enter FF2 Don't Enter D (0, 0) Multiple Choice Both airlines are better off by entering this market The outcome of this game is a prisoner's dilemma. O Accommodating Airlines has a first-mover advantage in this game. Friendly Flyers has a first-mover advantage in this game.
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