Use the Table Below to Answer the Following Questions

question 2

Multiple Choice

Use the table below to answer the following questions.
Table 15.2.5

-Refer to Table 15.2.5. Two software firms have developed an identical new software application. They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dollars. What is Firm 1's best strategy?

• A)Give away the application regardless of what Firm 2 does.
• B)Sell the application at $30 a copy regardless of what Firm 2 does.
• C)Give away the application only if Firm 2 sells the application.
• D)Give away the application only if Firm 2 gives away the application.
• E)Sell the application only if Firm 2 sells the application.

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Definitions:

Final Goods and Services

Products that have completed the production process and are available for purchase by the end consumer.

Money Supply

The entirety of financial assets present in an economy at a given moment, encompassing cash, coins, and funds in checking and savings accounts.

Average Price Level

An index reflecting the overall direction and movement of prices within an economy, serving as an indicator of inflation or deflation over time.

Quantity Theory of Money

A theory stating that the general price level of goods and services is directly proportional to the amount of money in circulation.