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Consider the following decision tree. This tree illustrates hypothetical payoffs to General Mills (GM) and Quaker Oats (Q) if they engage in a price war. If GM cuts prices and Quaker Oats follows this behavior: What amount does the GM gain or lose?

GM Cut price price cut Cut price No price cut GM7t = $3 million/year Q,E = $3 million/year GM,c = $10 million/year OR = $2 million/year GulVl,c = $5 million/year Q71: = $5 million/year B's strategies A's Strategies Enter Don't Enter Raise price (A gets 5, B gets 50) (A gets 200, B gets 0) Lower price (A gets 20, B gets 50) (A gets 50, B gets 0) B's Strategies A's Strategies Enter Don't Enter Raise price (A gets 12, B gets 4) (A gets 21, B gets 5) Lower price (A gets 15, B gets 6) (A gets 14, B gets 6) Company B Strategy 1 Strategy 2 Company B's Company B's Strategy 1 Profit: $9 million Profit: $8 million Company A's Company A's Company Profit: $8 million Profit: $7 million A Strategy 2 Company 33 Company 88 Profit: $8 million Profit: $7 million Company A's Company A's Profit: $10 million Profit: $8 million