Table 17-24 Two Firms Are Considering Going Out of Business and Selling

question 31

Multiple Choice

Table 17-24
Two firms are considering going out of business and selling their assets. Each considers what happens if the other goes out of business. The payoff matrix below shows the net gain or loss to each firm.
-Refer to Table 17-24. What is the Nash equilibrium?

• A)A and B both stay in business
• B)A stays in business, B sells
• C)B stays in business, A sells
• D)Both A and B sell

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to some numbers more than others.

FOB Shipping Point

This term indicates that the buyer is responsible for the goods and their shipping costs as soon as the goods leave the seller's premises.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.