Wal-Mart Stores, Inc., is an enomously successful chain of discount retail stores started by Sam Walton in 1969. Wal-Mart's expansion strategy has been to charge less than ordinary department stores and small retal stores by relying on size and high-inventory tumover. Sam Walton began opening his stores in small Southwestem towns. By the mid-1970s, other discount chains realized that Wal-Mart has a profitable strategy. Since there are lots of small towns in the United States, a race ensued to see who could be the first to get to each town. Therefore, Wal-Mart found itself in a preemption game of the sort illustrated by the payoff matrbx to the right. Company X Enter Don't enter Enter -5, - 10 40, 0 Wal-Mart Don't enter 0, 40 0,0 The game's Nash equilibium (oquilibria) is (aro) for O A. Wal-Mart to enter and Company X to not enter and for both Wal-Mart and Company X to enter. O B. Wal-Mart to entor and Company X to not enter. Oc. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not enter and Company X to enter. O D. Both Wal-Mart and Company X to enter. O E. Company X to enter and Wal-Mart to not enter. Now suppose Wal-Mart moves first. What will be the Nash equilibrium? The game's Nash equilibrium (equilibria) is (are) for O A. Both Wal-Mart and Company X to enter. O B. Wal-Mart to entor and Company X to not enter and for both Wal-Mart and Company X to enter. Oc. Company X to enter and Wal-Mart to not enter. O D. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not enter and Company X to enter. O E. Wal-Mart to enter and Company X to not enter.
Wal-Mart Stores, Inc., is an enomously successful chain of discount retail stores started by Sam Walton in 1969. Wal-Mart's expansion strategy has been to charge less than ordinary department stores and small retal stores by relying on size and high-inventory tumover. Sam Walton began opening his stores in small Southwestem towns. By the mid-1970s, other discount chains realized that Wal-Mart has a profitable strategy. Since there are lots of small towns in the United States, a race ensued to see who could be the first to get to each town. Therefore, Wal-Mart found itself in a preemption game of the sort illustrated by the payoff matrbx to the right. Company X Enter Don't enter Enter -5, - 10 40, 0 Wal-Mart Don't enter 0, 40 0,0 The game's Nash equilibium (oquilibria) is (aro) for O A. Wal-Mart to enter and Company X to not enter and for both Wal-Mart and Company X to enter. O B. Wal-Mart to entor and Company X to not enter. Oc. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not enter and Company X to enter. O D. Both Wal-Mart and Company X to enter. O E. Company X to enter and Wal-Mart to not enter. Now suppose Wal-Mart moves first. What will be the Nash equilibrium? The game's Nash equilibrium (equilibria) is (are) for O A. Both Wal-Mart and Company X to enter. O B. Wal-Mart to entor and Company X to not enter and for both Wal-Mart and Company X to enter. Oc. Company X to enter and Wal-Mart to not enter. O D. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not enter and Company X to enter. O E. Wal-Mart to enter and Company X to not enter.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
2
Transcribed Image Text:Wal-Mart Stores, Inc., is an enomously successful chain of discount retail stores started by Sam Walton in 1969.
Wal-Mart's expansion strategy has been to charge less than ordinary department stores and small retail stores by relylng
on size and high-irnventory turmover. Sam Walton began opening his stores in small Southwestern towns. By the
mid-1970s, other discount chains realized that Wal-Mart has a profitable strategy. Since there are lots of small towns in
the United States, a race ensued to see who could be the first to get to each town. Therefore, Wal-Mart found itself in a
preemption game of the sort illustrated by the payoff matrix to the right.
Company X
Enter
Don't enter
Enter
-5, - 10
40, 0
Wal-Mart
Don't enter
0, 40
0,0
The game's Nash equilibrium (squilibria) is (are) for
O A. Wal-Mart to enter and Company X to not enter and for both Wal-Mart and Company X to enter.
O B. Wal-Mart to enter and Company X to not enter.
OC. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not enter and Company X to enter.
O D. Both Wal-Mart and Company X to enter.
O E. Company X to enter and Wal-Mart to not enter.
Now suppose Wal-Mart moves first. What will be the Nash equilibrium?
The game's Nash equilibrium (equilibria) is (are) for
O A. Both Wal-Mart and Company X to enter.
O B. Wal-Mart to enter and Company X to not enter and for both Wal-Mart and Company X to enter.
Oc. Company X to enter and Wal-Mart to not enter.
O D. Wal-Mart to enter and Company X to not enter and for Wal-Mart to not enter and Company X to enter.
O E. Wal-Mart to enter and Company X to not enter.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education