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. If they both agree to cooperate on a strategy that maximizes their joint profits, annual profit will grow by
A)$1.0 million for Lopes and by $1.5 million for HomeMax.
B)$0.4 million for Lopes and by $3.4 million for HomeMax.
C)$3.2 million for Lopes and by $0.6 million for HomeMax.
D)$2.0 million for Lopes and by $2.5 million for HomeMax.

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. If they both agree to cooperate on a strategy that maximizes their joint profits, annual profit will grow by
A)$1.0 million for Lopes and by $1.5 million for HomeMax. 
B)$0.4 million for Lopes and by $3.4 million for HomeMax. 
C)$3.2 million for Lopes and by $0.6 million for HomeMax. 
D)$2.0 million for Lopes and by $2.5 million for HomeMax.

Quizplus · Accepted Answer

The strategy that maximizes the joint profit of Lopes and HomeMax is for both stores to increase their store size and parking lot, resulting in Lopes' profit increasing by $2.0 million and HomeMax's profit increasing by $2.5 million. Therefore, the joint profit increase is $4.5 million.

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