The Figure Shown Displays the Choices That Could Be Made

question 4

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 profits can we predict Starbucks will earn given the outcome of this game?

• A)$2 million
• B)−$1 million
• C)$0 million
• D)-$2 million

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Definitions:

Solar Panels

Devices that convert sunlight into electricity, used as a renewable energy source to power buildings, homes, and more.

Risk Premium

A risk premium is the added return an investor needs to compensate for the risks of future payments.

Future Payments

Obligations or amounts of money that are required to be paid at a future date, often relating to loans, financing arrangements, or deferred payment agreements.

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The process of choosing which assets or projects to invest in, with the aim of maximizing returns or value over time.