Table 17-13
Two home-improvement stores (Lopes and HomeMax) 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. Increases in annual profits of the two home-improvement stores are shown in the table below.
-Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth related profit. They should both agree to
A)increase their store and parking lot sizes.
B)refrain from increasing their store and parking lot sizes.
C)be more competitive in capturing market share.
D)share the context of their conversation with the Federal Trade Commission.

Question

Table 17-13
Two home-improvement stores (Lopes and HomeMax) 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. Increases in annual profits of the two home-improvement stores are shown in the table below. 
-Refer to Table 17-13. Suppose the owners of Lopes and HomeMax meet for a friendly game of golf one afternoon and happen to discuss a strategy to optimize growth related profit. They should both agree to
A)increase their store and parking lot sizes. 
B)refrain from increasing their store and parking lot sizes. 
C)be more competitive in capturing market share. 
D)share the context of their conversation with the Federal Trade Commission.

Quizplus · Accepted Answer

According to the game depicted in the table, both Lopes and HomeMax have a dominant strategy of not increasing their store and parking lot sizes. This results in the highest annual profits for both stores. Therefore, they should both agree to refrain from increasing their store and parking lot sizes.

Table 17-13 Two Home-Improvement Stores (Lopes and HomeMax) in a Growing Urban