Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions.
-If Happy Feet chooses to Ad and Best Nails then chooses to No Ad, Happy Feet earns million in net profit and Best Nails earns million.
A)$5; $1
B)$2; $3
C)$1; $4
D)$4; $1

Question

Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions.
-If Happy Feet chooses to Ad and Best Nails then chooses to No Ad, Happy Feet earns million in net profit and Best Nails earns million.
A)$5; $1 
B)$2; $3 
C)$1; $4 
D)$4; $1

Quizplus · Accepted Answer

If Happy Feet chooses to Ad and Best Nails chooses to No Ad, Happy Feet earns $5 million in net profit, which is the highest payoff for Happy Feet among all the possible outcomes. Therefore, its best choice is to Ad.

Happy Feet Wants to Prevent Best Nails from Entering the Nail