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Use the following table for this question. Enter Big Brew decision High Price Big Brew makes $3 million Kona makes $2 million Low Price Little Kona decision Don't Enter Kona makes zero Big Brew makes $1 million Kona loses $1 million Big Brew makes $7 million Big Brew makes $2 million Kona makes zero If the two firms were allowed to work together (collude) and create a binding agreement, what is the optimal (best) outcome for both of them? Big Brew gains $3 million and Little Kona gains $2 million Big Brew and Little Kona select $7 million/0 million respectively and split the $$$. Big Brew gains $1 million and Little Kona loses $1 million O Big Brew gains $2 million and Little Kona gains zero

Use the following table for this question. Enter Big Brew decision High Price Big Brew makes $3 million Kona makes $2 million Low Price Little Kona decision Don't Enter Kona makes zero Big Brew makes $1 million Kona loses $1 million Big Brew makes $7 million Big Brew makes $2 million Kona makes zero If the two firms were allowed to work together (collude) and create a binding agreement, what is the optimal (best) outcome for both of them? Big Brew gains $3 million and Little Kona gains $2 million Big Brew and Little Kona select $7 million/0 million respectively and split the $$$. Big Brew gains $1 million and Little Kona loses $1 million O Big Brew gains $2 million and Little Kona gains zero

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Use the following table for this question. Enter Little Kona decision Don't Enter Big Brew decision High Price Big Brew makes $3 million Big Brew makes $1 million Kona loses $1 million Kona makes $2 million Low Price Big Brew makes $7 million Big Brew makes $2 million Kona makes zero Kona makes zero If the two firms were allowed to work together (collude) and create a binding agreement, what is the optimal (best) outcome for both of them? O Big Brew gains $3 million and Little Kona gains $2 million O Big Brew and Little Kona select $7 million/0 million respectively and split the $$$. O Big Brew gains $1 million and Little Kona loses $1 million O Big Brew gains $2 million and Little Kona gains zero
Transcribed Image Text:Use the following table for this question. Enter Little Kona decision Don't Enter Big Brew decision High Price Big Brew makes $3 million Big Brew makes $1 million Kona loses $1 million Kona makes $2 million Low Price Big Brew makes $7 million Big Brew makes $2 million Kona makes zero Kona makes zero If the two firms were allowed to work together (collude) and create a binding agreement, what is the optimal (best) outcome for both of them? O Big Brew gains $3 million and Little Kona gains $2 million O Big Brew and Little Kona select $7 million/0 million respectively and split the $$$. O Big Brew gains $1 million and Little Kona loses $1 million O Big Brew gains $2 million and Little Kona gains zero
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