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.
The game in the figure is shown using a:
A) decision tree.
B) decision matrix.
C) flowchart.
D) graph.

Question

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.
The game in the figure is shown using a:
A) decision tree. 
B) decision matrix. 
C) flowchart. 
D) graph.

Quizplus · Accepted Answer

The best choice for both Starbucks and Dunkin Donuts is to not expand. This is because if one of them expands, the other will lose some business and if both expand, the market will be saturated and neither will do well. Therefore, the best outcome for both companies is to maintain their current market share and not risk losing any business. This is shown in the decision tree by the highest payoffs (profits) being associated with the "do not expand" option.

This Figure Displays the Choices Being Made by Two Coffee