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Airway (a Midwestern department store chain) and Corvett (an Eastern department store chain) are determining whether to expand their geographical bases. The only viable manner
Airway (a Midwestern department store chain) and Corvett (an Eastern department store chain) are determining whether to expand their geographical bases. The only viable manner by which expansion might be carried out is for a chain to open stores in the other's area. If neither chain expands, then Airway's profits will be $3 million and Corvett's will be $3 million. If Airway expands and Corvett does not, then Airway's profits will be $4.5 million, and Corvett will lose $1 million. If Airway does not expand and Corvett does, Airway will lose $1 million, and Corvett will earn $4.5 million. Finally, if both chains expand, they both earn $2 million in profits. What is the equilibrium point for this game? (25 pts.) Select one: a. Airway expanding and Corvett not expanding ( $4.5 million, $1 million) is an equilibrium point. b. Airway and Corvett each not expanding ( $3 million, $3 million) is an equilibrium point. c. Airway and Corvett each expanding ( $2 million, $2 million) is an equilibrium point. d. Airway not expanding and Corvett expanding ($1 million, $4.5 million) is an equilibrium point. e. Airway and Corvett each expanding ( $1 million, $1 million) is an equilibrium point. f. Airway and Corvett each expanding (\$2.5 million. $2.5 million) is an equilibrium point
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