Kellogg's and General Mills Are Two of the Dominant Breakfast

question 72

Multiple Choice

Kellogg's and General Mills are two of the dominant breakfast cereal manufactures in the U.S. Each firm can either sign or not sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box. If both companies sign an athlete, they will each make $5 million in economic profit. If only firm signs, they earn $8 million in economic profit and the other firm incurs an economic loss of $1 million. If neither firm signs, they break even. What are the strategies in this game?

• A) Do not sign exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and make $8 million in profit.
• B) Sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and do not sign exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box.
• C) Sign an exclusive contract with an Olympian gold-medal athlete to appear on the cover of a cereal box and make $8 million in profit.
• D) Make $5 million or $8 million in profit.

---

Definitions:

Marketing Channel

Pathways that products and services follow from producers to consumers, including intermediaries like wholesalers and retailers.

Oriental Rugs

Hand-knotted or woven rugs from the Middle East, Central Asia, and the Far East, known for their intricate patterns and craftsmanship.

Brick-And-Mortar

Traditional physical retail stores as opposed to online or electronic marketplaces.

Retail Feed Stores

Shops or outlets that specialize in selling feed and other supplies for animals to the general public.