Use the following to answer questions 47-48:
Figure 12.10
-(Figure 12.10) Payoffs are profits in millions of dollars. Should Mealy Mattress develop its antibedbug mattress if Feely Mattress promises not to develop its own antibedbug mattress?
A) Yes, Feely's promise is credible, and Mealy's profits would increase from $6 million to $13 million.
B) Yes, Feely's promise is credible, and Mealy's profits would increase from $4 million to $13 million.
C) No, Feely's promise is not credible, so Mealy should not develop the antibedbug mattress and should earn $6 million.
D) No, Feely's promise is not credible, so Mealy should develop the antibedbug mattress and earn $13 million.

Question

Use the following to answer questions 47-48:
Figure 12.10 
-(Figure 12.10) Payoffs are profits in millions of dollars. Should Mealy Mattress develop its antibedbug mattress if Feely Mattress promises not to develop its own antibedbug mattress?
A) Yes, Feely's promise is credible, and Mealy's profits would increase from $6 million to $13 million. 
B) Yes, Feely's promise is credible, and Mealy's profits would increase from $4 million to $13 million. 
C) No, Feely's promise is not credible, so Mealy should not develop the antibedbug mattress and should earn $6 million. 
D) No, Feely's promise is not credible, so Mealy should develop the antibedbug mattress and earn $13 million.

Quizplus · Accepted Answer

Feely's promise is not credible, so Mealy should not rely on it and should not develop the antibedbug mattress, maintaining its current profit of $6 million.

Use the Following to Answer Questions 47-48