Table 17-6 Two Home-Improvement Stores (Lopes and HomeMax) in a Growing Urban

question 131

Multiple Choice

Table 17-6
Two home-improvement stores (Lopes and HomeMax) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Increases in annual profits (in millions of dollars) of the two home-improvement stores are shown in the following figure.
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-Refer to Table 17-6. If both stores follow a dominant strategy, HomeMax's annual profit will grow by

• A)$0.6 million.
• B)$1.5 million.
• C)$2.5 million.
• D)$3.4 million.

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Definitions:

Point C

Typically refers to a specific point on a graph or model in economics, which could denote a particular state or condition in an economic analysis.

Production Possibility Curve

a graph that shows all the different combinations of two goods or services that can be produced within a given economy, assuming full and efficient use of resources.

Units of Butter

A hypothetical unit used in economics to represent production output, often used in examples discussing opportunity costs and production possibilities.

Production Possibilities Curve

A graphical representation showing the maximum combination of goods and services that can be produced in a given period with available resources, illustrating the trade-offs and opportunity costs.