Use the Following to Answer Question

question 32

Multiple Choice

Use the following to answer question:
-(Table: Two Rival Gas Stations) Use Table: Two Rival Gas Stations.The table shows a payoff matrix for two gas stations in a small town.Each firm can set either a high price or a low price,and customers view these two firms as nearly perfect substitutes.Profits in each cell of the payoff matrix are given as (Swifty's profit,Speedy's profit) .Which statement describes a dominant strategy?

• A)Swifty will always set a low price,no matter Speedy's choice.
• B)Swifty will always set a high price,no matter Speedy's choice.
• C)Swifty will set a low price when Speedy sets a high price,but Swifty will set a high price when Speedy sets a low price.
• D)Swifty will set a high price when Speedy sets a high price,but Swifty will set a low price when Speedy sets a low price.

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Definitions:

Labor Variances

Differences between the actual labor costs incurred and the standard labor costs expected for the work performed.

Standard Labor Rate

A predetermined cost per labor hour, used in budgeting and cost control for planning and evaluating labor expenses.

Actual Hours Incurred

The real number of hours worked or used in the completion of a task or production of a good, as opposed to the estimated hours.

Materials Price Variance

The difference between the actual cost of materials and the expected (standard) cost multiplied by the quantity of materials used.