Table 17-6 Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their narket share. Both are interested in expanding the size of their store and parking lot to accommodate potential growt in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure. Lopes Do notincreasethe size of store and parking lot Increase the sizeof store and parking lot Lopes = 1.0 Lopes = 0.4 Increase the size of store and parking lot HomeMax = 1.5 HomeMax = 3.4 HomeMax Lopes = 3.2 Lopes = 2.0 Do notincreasethe size of store and parking lot HomeMax = 0.6 HomeMax = 2.5 efer to Table 17-6. When this game reaches a Nash equilibrium, annual profit will grow by a. $0.6 million for HomeMax and by $3.2 million for Lopes. b. $2.5 million for HomeMax and by $2.0 million for Lopes. c. $3.4 million for HomeMax and by $0.4 million for Lopes. O d. $1.5 million for HomeMax and by $1.0 million for Lopes.

Table 17-6 Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their narket share. Both are interested in expanding the size of their store and parking lot to accommodate potential growt in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure. Lopes Do notincreasethe size of store and parking lot Increase the sizeof store and parking lot Lopes = 1.0 Lopes = 0.4 Increase the size of store and parking lot HomeMax = 1.5 HomeMax = 3.4 HomeMax Lopes = 3.2 Lopes = 2.0 Do notincreasethe size of store and parking lot HomeMax = 0.6 HomeMax = 2.5 efer to Table 17-6. When this game reaches a Nash equilibrium, annual profit will grow by a. $0.6 million for HomeMax and by $3.2 million for Lopes. b. $2.5 million for HomeMax and by $2.0 million for Lopes. c. $3.4 million for HomeMax and by $0.4 million for Lopes. O d. $1.5 million for HomeMax and by $1.0 million for Lopes.

Principles of Microeconomics (MindTap Course List)

8th Edition

ISBN:9781305971493

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: Oligopoly

Section: Chapter Questions

Problem 9PA

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