Burger Doodle,the Incumbent Firm,wishes to Set a Limit Price of $8

question 15

Multiple Choice

Burger Doodle,the incumbent firm,wishes to set a limit price of $8 (rather than the profit-maximizing price of $12) to prevent Designer Burger from entering its profitable market.The game tree above shows the payoffs for various decisions.Burger Doodle makes its pricing decision,then Designer Burger decides whether to enter or stay out of the market.If Designer Burger chooses to enter the market,then Burger Doodle may or may not decide to accommodate Designer's entry by changing its initial price to the Nash equilibrium price of $10. If the condition in the question above is met,Burger Doodle will set price equal to $________ and it will earn $__________ of profit while Designer Burger will earn $__________ of profit.

• A)8; 125,000; 0
• B)8; 75,000; -40,000
• C)10; 101,000; 25,000
• D)10: 96,000; 25,000
• E)12; 165,000; 0

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Definitions:

Porter

Refers to Michael E. Porter, a prominent figure in economics and business strategy, known for his theories on competition and the value chain.

Failures of Process

Situations where an established procedure or workflow does not operate as intended, leading to inefficiencies, errors, or undesired outcomes.

Environmental Opportunities

Circumstances or trends in the environment that can be leveraged for strategic advantage or innovation.

Organizational Strengths

Organizational strengths are the unique resources, capabilities, and positive attributes that enable an organization to achieve its goals and maintain a competitive advantage.