The cola market is controlled by two firms, Cola 1 and Cola 2. As a market analyst, you have been provided with the following information: () Current Cola 1 drinkers will drink Cola 1 the next time they purchase cola with probability 0.8; (ii) Current Cola 2 drinkers will drink Cola 2 the next time they purchase cola with probability x, where 0.5

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The cola market is controlled by two firms, Cola 1 and Cola 2. As a market analyst, you have been
provided with the following information: (1) Current Cola 1 drinkers will drink Cola 1 the next time they
purchase cola with probability 0.8; (ii) Current Cola 2 drinkers will drink Cola 2 the next time they
purchase cola with probability x, where 0.5 < x < 1; (iii) over a long period of time, a cola drinker will
purchase Cola 2 with frequency
Make the following assumptions: (i) the cola market is in steady state; (ii) all cola drinkers display the
same stochastic behaviour.
Based on the information provided, what is the value of x?
Transcribed Image Text:The cola market is controlled by two firms, Cola 1 and Cola 2. As a market analyst, you have been provided with the following information: (1) Current Cola 1 drinkers will drink Cola 1 the next time they purchase cola with probability 0.8; (ii) Current Cola 2 drinkers will drink Cola 2 the next time they purchase cola with probability x, where 0.5 < x < 1; (iii) over a long period of time, a cola drinker will purchase Cola 2 with frequency Make the following assumptions: (i) the cola market is in steady state; (ii) all cola drinkers display the same stochastic behaviour. Based on the information provided, what is the value of x?
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