Table 11-11 There Are Two Mobile Home Manufacturers in Nevada, Sturdy Homes

question 385

Multiple Choice

Table 11-11
$\begin{array}{c} \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad \quad\text { Sturdy Homes (S) Strategies }\\\text { My Haven's (M) Strategies}\begin{array}{|c|c|c|c|} \hline& \mathbf{\$ 8 , 0 0 0} & \mathbf{\$ 1 0 , 0 0 0} & \mathbf{\$ 1 2 , 0 0 0} \\\hline \$8, 000 & \text { S: } \$ 4 \text { million } & \text { S: } \$ 2 \text { million } & \text { \$: } \$ 1 \text { million } \\& \text { M: } \$ 4 \text { million } & \text { M: } \$ 6 \text { million } & \text { M: } \$ 7 \text { million } \\\hline {\mathbf{\$ 1 0 , 0 0 0}} & \text { S: } \$ 6 \text { million } & \text { S: } \$ 5 \text { million } & \text { S: } \$ 2 \text { million } \\& \text { M: } \$ 2 \text { million } & \text { M: } \$ 5 \text { million } & \text { M: } \$ 6 \text { million } \\\hline{\$ 12,000} & \text { S: } \$ 7 \text { million } & \text { S: } \$ 6 \text { million } & \text { S: } \$ 3 \text { million } \\& \text { M: } \$ 1 \text { million } & \text { M: } \$ 2 \text { million } & \text { M: } \$ 3 \text { million } \\\hline\end{array}\end{array}$
There are two mobile home manufacturers in Nevada, Sturdy Homes (S) and My Haven (M) . Sturdy Homes has been in the market for a long time and must now compete with newcomer, My Haven.Suppose that Sturdy Homes believes that My Haven will match any price it sets.Use Table 11-11 to answer the following question and assume throughout that Sturdy Homes believes that My Haven will match any price it sets.
-Refer to Table 11-11.What price will Sturdy Homes charge and what profit does Sturdy Homes expect to make?

• A)Price = $8,000; expected profit = $7 million
• B)Price = $8,000; expected profit = $4 million
• C)Price = $10,000; expected profit = $5 million
• D)Price = $12,000; expected profit = $3 million

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