The Figure Shown Displays the Choices That Could Be Made

question 7

Multiple Choice

The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses) they will earn.What will be the outcome of this game?

• A)Starbucks will expand and Dunkin' Donuts will not expand.
• B)Starbucks will not expand and Dunkin' Donuts will expand.
• C)Starbucks and Dunkin' Donuts will both expand.
• D)Neither Starbucks nor Dunkin' Donuts will expand.

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Definitions:

Navigation Rights

Legal rights or privileges concerning the passage of ships or boats through specific waterways, often key to trade, military, and transportation activities.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power, typically measured as an annual percentage increase.

Nation's Currency

The system of money in general use in a particular country, representing the medium of exchange and basis for trade.

Unsold Goods

Items that have been produced or acquired for sale but have not been purchased by consumers, often leading to excess inventory for businesses.