Scenario 13.16
Consider the pricing game below:
-Refer to Scenario 13.16.If Gooi can move first,and Ici wants to realize the ($150,$300)payoff,
A)all it has to do is threaten to buy yogurt machines,no matter what Gooi does.
B)it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $50.
C)it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $150.
D)it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $300.
E)it has to move before Gooi; there is no other way.

Question

Scenario 13.16
Consider the pricing game below: 
-Refer to Scenario 13.16.If Gooi can move first,and Ici wants to realize the ($150,$300)payoff,
A)all it has to do is threaten to buy yogurt machines,no matter what Gooi does. 
B)it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $50. 
C)it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $150. 
D)it could make its threat credible by rearranging its physical plant so that the installation of gelato machines would bring in profit less than $300. 
E)it has to move before Gooi; there is no other way.

Quizplus · Accepted Answer

If Ici threatens to buy yogurt machines, Gooi may decide not to install gelato machines since it will not be profitable anymore. To make the threat credible, Ici needs to arrange its physical plant so that the installation of gelato machines would bring in a profit of less than $50. This way, if Gooi does not back down and installs gelato machines, Ici can still earn a profit of $150 by installing yogurt machines.

Scenario 13.16 Consider the Pricing Game Below