Table 16-10
Two discount superstores (Ultimate Saver and SuperDuper Saver) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Growth-related profits of the two discount superstores are shown in the table below.

-Refer to Table 16-10.The dominant strategy is to increase the size of its store and parking lot for
A)SuperDuper Saver, but not for Ultimate Saver.
B)Ultimate Saver, but not for SuperDuper Saver.
C)both stores.
D)neither store.

Question

Table 16-10
Two discount superstores (Ultimate Saver and SuperDuper Saver) in a growing urban area are interested in expanding their market share. Both are interested in expanding the size of their store and parking lot to accommodate potential growth in their customer base. The following game depicts the strategic outcomes that result from the game. Growth-related profits of the two discount superstores are shown in the table below.
 
-Refer to Table 16-10.The dominant strategy is to increase the size of its store and parking lot for
A)SuperDuper Saver, but not for Ultimate Saver. 
B)Ultimate Saver, but not for SuperDuper Saver. 
C)both stores. 
D)neither store.

Quizplus · Accepted Answer

Both stores have a dominant strategy of increasing the size of their store and parking lot. This is because regardless of what the other store does, both stores will earn higher profits if they expand. If both stores expand, they will both earn $12 million in profits. If only one store expands while the other does not, the store that expands will earn $16 million in profits while the store that does not expand will earn $8 million in profits. Therefore, it is in the best interest of both stores to expand.

Table 16-10 Two Discount Superstores (Ultimate Saver and SuperDuper Saver) in a in a Growing