Table 17-6 Two Home-Improvement Stores (Lopes and HomeMax) in a Growing Urban

Table 17-6
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 (in millions of dollars) of the two home-improvement stores are shown in the following figure.
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-Refer to Table 17-6. When this game reaches a Nash equilibrium, annual profit will grow by

A) $1.5 million for HomeMax and by $1.0 million for Lopes.
B) $3.4 million for HomeMax and by $0.4 million for Lopes.
C) $0.6 million for HomeMax and by $3.2 million for Lopes.
D) $2.5 million for HomeMax and by $2.0 million for Lopes.

Correct Answer:

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