SCENARIO: PAYOFF MATRIX FOR AIRBUS AND BOEING

question 35

Multiple Choice

SCENARIO: PAYOFF MATRIX FOR AIRBUS AND BOEING
The payoff matrix supplied shows outcomes of various strategies
That Airbus and Boeing might follow in response to action on the
Part of the other company.This payoff matrix describes actions
In developing so­called super­jumbo jets that can carry 600 or
More passengers.In each element, the lower­left value gives
The outcome for Boeing based on the action of Airbus and the
Upper­right value gives the outcome for Airbus based on the
Action of Boeing.For example, in element A, each company will
Lose $10 million if they both decide to produce super­jumbo jets.
(Scenario: Payoff Matrix for Airbus and Boeing) Boeing has
Decided not to produce super­jumbo jets.Instead, it will
Continue to market its 450­passenger 747s.However, Airbus will
Produce super­jumbo jets.Which element represents their joint
Decisions?

• A)A
• B)B
• C)C
• D)D

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Definitions:

Net Operating Income

The total operating profit of a company after all operating expenses, excluding taxes and interest expenses, have been deducted from total revenue.

First Year

Refers to the initial period or the first 12 months of a specific timeframe, often used in the context of financial or operational performance.

Absorption Costing

A method of product costing that includes all manufacturing costs, both fixed and variable, in the cost of a product.

Contribution Margin

The amount remaining after variable costs have been subtracted from revenue, which contributes to covering fixed costs and generating profit.