This Figure Displays the Choices Being Made by Two Coffee

question 15

Multiple Choice

This figure displays the choices being made by two coffee shops: Starbucks and Dunkin Donuts.Both companies are trying to decide whether or not to expand in an area.The area can handle only one of them expanding,and whoever expands will cause the other to lose some business.If they both expand,the market will be saturated,and neither company will do well.The payoffs are the additional profits (or losses) they will earn.
According to the figure shown,Dunkin Donuts:

• A) should expand, regardless of what Starbucks chooses to do.
• B) should not expand, regardless of what Starbucks chooses to do.
• C) has first-mover advantage.
• D) does not have a dominant strategy.

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Definitions:

Equal

Describes a state of being the same in quantity, size, degree, or value, often applied to mathematical entities, rights, and opportunities.

Smallpox

A highly contagious viral disease characterized by fever, weakness, and skin eruptions, eradicated by vaccination by 1980.

Subsistence

The act or reality of sustaining or upholding oneself, particularly at the most basic level.

Domestication

The process by which humans modify the genetic traits of plants and animals to make them more useful and suited for human purposes, often leading to symbiotic relationships.