Question
In a small town there are two doctor's offices (A and B).Each is considering acquiring a new piece of medical equipment that costs $50,000.Total demand
In a small town there are two doctor's offices (A and B).Each is considering acquiring a new piece of medical equipment that costs $50,000.Total demand in the small town and surrounding area for this new equipment amounts to $75,000. Each firm has to decide whether to get the new technology, and the new patients/business that it will bring in. If both get the new equipment, then they're each paying the full cost for the equipment, and each will get half of the new business. If only one gets the equipment, they still pay the full cost but get all the new business; the other practice would lose $10,000 in business because patients will go to the practice with new equipment.If neither buys, patients do not get access to the new equipment, no costs are incurred, and no new business is generated.
1.What about Practice B, assuming they have to decide without knowing A's choice?
a. Don't get equipment; it won't help anyone
b. Get equipment; maximizes income regardless what A does
c. Get equipment; profit is guaranteed
d. No way to know
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started