Question

please answer all questions!

Two discount superstores (Ultimate Saver and SuperDuper 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. Table 17-5 SuperDuper Saver Increase the size of store and parking lot Do not increase the size of store and parking lot Ultimate Saver Increase the size of store and parking lot SuperDuper Saver = $50 Ultimate Saver = $65 SuperDuper Saver - $25 Ultimate Saver = $275 Do not increase the size of store and parking lot SuperDuper Saver = $250 Super Duper Saver - $85 Ultimate Saver - $35 Ultimate Saver - $135 Refer to Table 17-5. When this game reaches a Nash equilibrium, what will the dollar value of growth-related profits be? Ultimate Saver $40 and SuperDuper Saver $255 U Ultimate Saver $70 and SuperDuper Saver $55 U Ultimate Saver $140 and SuperDuper Saver $90 Ultimate Saver $280 and Super Duper Saver $30

it should be no problem with 1st question.

Answer 1

As per HOMEWORKLIB RULES, in case of multiple questions, only the first question is to be attempted.

Kindly ask rest of the questions in a separate post.

1.

Correct option: Ultimate Saver $65 and SuperDuper Saver $50

Reason: When SD Saver chooses to increase the size, U Saver will choose to Increase

When SD Saver chooses to not increase the size, U Saver will choose to Increase

Thus, it is dominant strategy for U Saver to increase the size

Similarly,

When U Saver chooses to increase the size, SD Saver will choose to Increase

When U Saver chooses to increase the size, SD Saver will choose to Increase

Thus, it is dominant strategy for SD Saver to increase the size

Thus, Nash equilibrium: (SD increase, U increase) = (50,65)

Closest option would be B