August 28, 2018

Camp Wood Apocalypse

Time for a pop quiz:

Let’s say you live near a popular campground. To make a little extra money, you and all your neighbors sell firewood at the end of your driveways for $3 per bundle.

You know that your cost per bundle averages out to $2, so each sale nets each of you $1 of profit per bundle.

You know your neighbors’ prices (i.e., $3 per bundle) but you don’t know their costs, so you don’t know what their net profit per bundle is.

Then one day, your neighbor Alice lowers her price to $2.75 per bundle.

And then the next day, your neighbor Bob lowers his price to $2.50 per bundle.

Your move.

What do you do?