The Diagram Shows the Extensive Form Version of a Strategic

question 19

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 is the solution to this extensive form game?

• A)Corporate Coffee will open a new coffee shop in this town; Jumbo Java will not.
• B)Jumbo Java will open a new coffee shop in this town; Corporate Coffee will not.
• C)Both firms will open a new coffee shop in this town.
• D)Neither firm will open a new coffee shop in this town.

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Definitions:

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