The Diagram Shows the Extensive Form Version of a Strategic

question 39

Multiple Choice

The diagram shows the extensive form version of a strategic game between the two nationally dominant coffee sellers, Corporate Coffee and Jumbo Java, both of whom are considering opening coffee shops in a new town. The payoffs represent, in thousands per month, the profit (or loss) the firm will realize from its decision. What does this extensive form game indicate about the decision to open a new coffee shop?

• A)The outcome of the game is a prisoner's dilemma.
• B)Neither firm has a first-mover advantage.
• C)Jumbo Java has a first-mover advantage.
• D)Corporate Coffee has a first-mover advantage.

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Definitions:

Outstanding Principal

The remaining amount of money borrowed that has not yet been repaid.

Accrued

Accumulated over time but not yet paid or received, typically referring to interest or income.

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A leading Canadian multinational bank providing a wide range of banking and financial services globally.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount that remains.