ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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There are two competing companies: Starbucks and Coffee Bean. Both companies want to determine whether they should launch a new advertising campaign for their coffee shops. If both companies start advertising, Starbucks will attract 4 new customers, while Coffee Bean will attract 3 new customers. However, if both companies decide not to advertise, Starbucks will attract only 3 new customers and 2 new customers for Coffee Bean. If only Starbucks decides to advertise, it will attract 5 new customers, while Coffee Bean will attract only 1 new customer for not advertising. While if only Coffee Bean decides to advertise, it will attract 5 new customers, and Starbucks will only attract 2 new customers for not advertising.

 

 

What is the optimal strategy for Coffee Bean if Starbucks chooses to Advertise? Please explain in detail

In relation to that, if Coffee Bean chooses to Advertise, the Payoff is __.

In relation to that, if Coffee Bean chooses Not to Advertise, the Payoff is __.

 

What is the optimal strategy for Coffee Bean if Starbucks chooses not to Advertise? Please explain in detail

In relation to that, if Coffee Bean chooses to Advertise, the Payoff is __.

In relation to that, if Coffee Bean chooses Not to Advertise, the Payoff is __.

 

What is the Dominant Strategy for Coffee Bean regardless of what Starbucks decides to do? Explain in three paragraphs long your findings.

 

 

The Nash Equilibrium for both coffee shops is to __.

Describe this game in its payoff table form. Explain in three long paragraphs your overall findings.

 

STARBUCKS
Advertise
Not Advertise
COFFEE BEANS
Advertise
(4,3)
(2,5)
Not Advertise
(5,1)
(3,2)
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Transcribed Image Text:STARBUCKS Advertise Not Advertise COFFEE BEANS Advertise (4,3) (2,5) Not Advertise (5,1) (3,2)
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