In 2008, a Former Intel Engineer Has Been Charged with Stealing

question 213

Multiple Choice

In 2008, a former Intel engineer has been charged with stealing trade secrets worth $1 billion. Intel owns 90 percent of the worldwide market for microprocessors, AMD has the rest. Conducting R&D is very expensive so suppose that each of these firms can either steal R&D or develop their own R&D. If both firms develop their own R&D, economic profit will be $50 million each. If one company steals R&D, that firm earns $100 million in economic profit while the other firm earns $10 million. If both firms steal R&D, each firm breaks even. What is NOT true about this game?

• A) The outcome will not be a dominant strategy equilibrium.
• B) A strategy is to steal R&D.
• C) A firm will make more profit if it steals R&D.
• D) A strategy is to conduct R&D.

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Definitions:

Specific Identification

An inventory costing method where each item in inventory is identified and tracked individually.

Ending Inventory

The complete worth of goods on the market at the closure of a bookkeeping period.

First-In, First-Out (FIFO)

An accounting method where the cost of the earliest inventory items purchased are the first to be recognized in determining cost of goods sold.

Perpetual Inventory System

A system of maintaining inventory records that updates the balance of inventory after each purchase or sale in real time.