wo small towns that are located near each other are thinking of building a fancy new shopping mall to attract business. However, building the mall is expensive, and will not be profitable unless the other town does not build the mall. The following table shows each town's payoffs under each of the possible outcomes, with the first number being Town A's payoff and the second number being Town B's payoff. The dominant strategy is for Town B Town A Build Mall Don't Build Mall Build Mall (-$100, -$100) ($2,000, -$500) Don't Build Mall (-$500, $2,000) (0, 0) A-Town B to build the mall and Town A will not B-neither town to build the mall C-both towns to build the mall D-Town A to build the mall and Town B will not
wo small towns that are located near each other are thinking of building a fancy new shopping mall to attract business. However, building the mall is expensive, and will not be profitable unless the other town does not build the mall. The following table shows each town's payoffs under each of the possible outcomes, with the first number being Town A's payoff and the second number being Town B's payoff. The dominant strategy is for Town B Town A Build Mall Don't Build Mall Build Mall (-$100, -$100) ($2,000, -$500) Don't Build Mall (-$500, $2,000) (0, 0) A-Town B to build the mall and Town A will not B-neither town to build the mall C-both towns to build the mall D-Town A to build the mall and Town B will not
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Two small towns that are located near each other are thinking of building a fancy new shopping mall to attract business. However, building the mall is expensive, and will not be profitable unless the other town does not build the mall. The following table shows each town's payoffs under each of the possible outcomes, with the first number being Town A's payoff and the second number being Town B's payoff. The dominant strategy is for
|
|
Town B |
|
Town A |
|
Build Mall |
Don't Build Mall |
|
|
Build Mall |
(-$100, -$100) |
($2,000, -$500) |
|
|
Don't Build Mall |
(-$500, $2,000) |
(0, 0) |
A-Town B to build the mall and Town A will not
B-neither town to build the mall
C-both towns to build the mall
D-Town A to build the mall and Town B will not
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