This Payoff Matrix Describes Actions in Developing So­called

question 69

Multiple Choice

This payoff matrix describes actions in developing so­called
Super­jumbo jets that can carry 600 or more passengers.
In each element, the lower­ left value gives the outcome
For Boeing based on the action of Airbus and the upper­
Right 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.
Payoff Matrix for Airbus and Boeing
(Scenario: Payoff Matrix for Airbus and Boeing) Now
Suppose that the U.S.government decides to provide a
$50 million subsidy to Boeing in order to encourage it to
Produce super­jumbo jets.Boeing decides to take the
Subsidy.Using the payoff matrix, what is Airbus's best
Strategy?

• A)continue to produce super­jumbo jets because its profits will not be affected
• B)continue to produce super­jumbo jets even though its profits will fall
• C)discontinue producing super­jumbo jets because its losses are lower than if it produced super­jumbo jets
• D)discontinue producing super­jumbo jets because it would neither lose nor earn more profits by producing Super­jumbo jets

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