4. Two home improvement stores (Lopes and Home Max) in a growing urban area are interested In expanding their market sha

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4 Two Home Improvement Stores Lopes And Home Max In A Growing Urban Area Are Interested In Expanding Their Market Sha 1 (314.06 KiB) Viewed 79 times

4. Two home improvement stores (Lopes and Home Max) 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. Lopes Increase the size of store Do not increase the size and parking lot of store and parking lot HomeMax Increase the size Lopes = $1.0 million Lopes = $0.4 million HomeMax = $1.5 million HomeMax = $3.4 million of store and parking lot Do not increase Lopes = $3.2 million Lopes = $2.0 million the size of store HomeMax = $0.6 million HomeMax = $2.5 million and parking lot Refer to Table 17-13. If both stores follow the dominant strategy, HomeMax's annual profit will grow by a. $0.6 million b. $1.5million c. $2.5million
d. $3.4million a. 5. When a binding price ceiling is imposed on a market, There is no longer a guarantee that the good will go to those who place the highest value on it. b. The quantity supplied at the price ceiling exceeds the quantity that would have been supplied without the price ceiling. c. All buyers benefit d. All of the above are correct. 6. Which of the following is NOT a difference between monopolies and perfectly competitive markets? a. Monopolies can earn profits in the long run while perfectly competitive firms break even b. Monopolies charge a price higher than the marginal cost while perfectly competitive firms charge a price equal to marginal cost. C. Monopolies choose to produce the quantity at which marginal revenue equals marginal cost while perfectly competitive firms do not. d. Monopolies face downward sloping demand curves while perfectly competitive firms face horizontal demand curves.