Joe Is the Owner of the 7-11 Mini Mart,Sam Is

question 74

Multiple Choice

Joe is the owner of the 7-11 Mini Mart,Sam is the owner of the SuperAmerica Mini Mart and together they are the only gas stations in town.At the current price of $3 per gallon,both receive total revenues of $1,000.Joe is considering cutting his price to $2.90,which would increase his total revenue to $1,350 if Sam continues to charge $3.If Sam's price remains $3 after Joe cuts his price,Sam will collect $500 in revenues.If Sam cuts his price to $2.90,his total revenues would also rise to $1,350 if Joe continues to charge $3.Joe will collect $500 in revenues if he keeps his price at $3 while Sam lowers his to $2.90.Joe and Sam will receive $900 each in total revenue if they both lower their price to $2.90.You may find it easier to answer the following question if you fill in the payoff matrix below. $\begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\text { Joe }\\\text { Sam }\begin{array}{|l|c|c|}\hline &\begin{array}{c}\text { Cut } \\\text { Price }\end{array} & \begin{array}{c}\text { Keep Old } \\\text { Price }\end{array} \\\hline \text { Cut } \\\text { Price } \\\hline \text { Keep Old } \\\text { Price } \\\hline\end{array}\end{array}$
Refer to the information given above.To both Joe and Sam,__________ is a __________.

• A) cutting price to $2.90;disequilibrium
• B) leaving price at $3;Nash equilibrium
• C) leaving price at $3;dominant strategy
• D) cutting price to $2.90;dominant strategy

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Definitions:

Amygdala

A region of the brain within the temporal lobe, involved in emotion regulation, especially fear and pleasure.

Sympathetic Division

Part of the ANS that is responsible for reacting to stressful events and bodily arousal; “fight-or-flight system.”

Nervous System

The complex network of nerves and cells that transmit signals between different parts of the body to coordinate actions and sensory information.

Display Rules

Learned ways of controlling displays of emotion in social settings.