Suppose Two Companies, Macrosoft and Apricot, Are Considering Whether to Develop

question 17

Multiple Choice

Suppose two companies, Macrosoft and Apricot, are considering whether to develop a new product, a touch-screen t-shirt. The payoffs to each of developing a touch-screen t-shirt depend upon the actions of the other, as shown in the payoff matrix below (the payoffs are given in millions of dollars) .  
Suppose Apricot makes its decision first, and then Macrosoft makes its decision after seeing Apricot's choice. What will happen if, before Apricot chooses, Macrosoft announces that it is going to develop a touch-screen t-shirt no matter what Apricot does?

• A)Apricot will develop a touch-screen t-shirt, and Macrosoft will not because Macrosoft's threat is not credible.
• B)Macrosoft will develop a touch-screen t-shirt, and Apricot will not because it's not in Apricot's interest to develop a touch-screen t-shirt if Macrosoft also develops one.
• C)Both Apricot and Macrosoft will develop a touch-screen t-shirt because neither company will want to back down.
• D)Neither Apricot nor Macrosoft will develop a touch-screen t-shirt because they will both realize that they are in a no-win situation.

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Definitions:

Dream

A series of thoughts, images, and sensations occurring in a person's mind during sleep.

Difference in the World

The impact or change that an individual or organization aims to make in society or a specific community.

Moving To

The process of transitioning from one state, position, or approach to another.

Focused Differentiation

A business strategy where a company offers unique products or services to a specific, narrow target market.