Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly

Question

If both restaurants do not clean, each will earn $8,000; alternatively, if they both hire workers to clean, each will earn only $5,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $12,000, and the other restaurant will make only $3,000.

If All-You-Can-Eat Café and GoodGrub Diner decide to collude, what is the outcome of this game?

A. All-You-Can-Eat Café cleans, and GoodGrub Diner cleans.

B. All-You-Can-Eat Café does not clean, but GoodGrub Diner cleans.

C. All-You-Can-Eat Café cleans, but GoodGrub Diner does not clean.

D. All-You-Can-Eat Café does not clean, and GoodGrub Diner does not clean.

Answer 1

If they are in the US and both want to stay open, it better be A.  Restaurants here in the US are subject to visits from the health department.

Answer 2

Answer is D.. they dont have to clean Just keep all profits, after all they are the only 2 resturants in town right.

Answer 3

Probably D. Ewwwww.

Answer 4

A.  If one cleans and finds out the other is not cleaning. then they will call the Health dept and get the other one in big trouble...