Table 11-6 LimoZeenz and AirPorter and Are the Only Two

question 194

Multiple Choice

Table 11-6
LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 11-6 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.
-Refer to Table 11-6.Let's suppose the game starts with each firm offering the mid-week discount so that LimoZeenz earns a profit of $6,000 and AirPorter earns a profit of $12,000.Is there an incentive for any one firm to stop offering the mid-week discount?

• A) No, neither firm has an incentive to stop offering the discount.
• B) Yes, both firms have an incentive to stop offering the discount.
• C) Yes, AirPorter has an incentive to stop offering the discount, but LimoZeenz does not.
• D) Yes, LimoZeenz has an incentive to stop offering the discount, but AirPorter does not.

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