Use the information below to answer the following questions. Two discount supers
ID: 1094155 • Letter: U
Question
Use the information below to answer the following questions.
Two discount superstores (Ultimate Saver and Super Duper 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 under two scenarios are reflected in the table below.
Ultimate Saver
Super Duper Saver
Low
High
High
SD-275, US-35
SD-65, SD-65
Low
SD-135, US-135
SD-35, US-275
21. What is the outcome of a non repetitive non cooperative Nash equilibrium?
A. SD-275, US-35
B. SD135, US-135
C. SD-65, US-65
D. SD-35, US-275
22. Noncooperative outcomes typically imply an outcome
A. that is worse for both parties to the "game."
B. that is better for both parties to the "game."
C. in which society is always worse off.
D. in which society is always better off.
23. If instead of a non repeating game the game is repeating what outcome would you expect?
A. SD-275, US-35
B. SD135, US-135
C. SD-65, US-65
D. SD-35, US-275
Ultimate Saver
Super Duper Saver
Low
High
High
SD-275, US-35
SD-65, SD-65
Low
SD-135, US-135
SD-35, US-275
Explanation / Answer
21) C. SD - 65 US - 65 (Both will choose high as it is also a dominant strategy)
22) A. that is worse for both parties to the "game." ( Such a solution is not pareto optimal, a better solution is possible)
23) B. SD135, US-135 (Because they will start trusting each other and hence will mutually earn high profits of 135 each.)
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