Refer to the Diagram, Where the Numerical Data Show Profits

question 333

Multiple Choice

Refer to the diagram, where the numerical data show profits in millions of dollars. Beta's profits are shown in the northeast corner and Alpha's profits in the southwest corner of each cell. If Alpha and Beta agree to a high-price policy through collusion, the temptation to cheat on that agreement is demonstrated by the fact that

• A)Beta can increase its profit by lowering its price.
• B)Beta can increase its profit by increasing its price still further.
• C)both Alpha and Beta can earn even more profits if both agree to a low-price policy.
• D)Alpha can increase its profit by reducing its production costs.

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Definitions:

Overcommitting

The act of promising more resources, time, or effort than can realistically be delivered, often leading to stress or failure to meet expectations.

Supply Management

The process of managing relationships with suppliers and controlling all the materials needed to produce goods or services.

Horizontal Integration

A strategy where a firm grows by acquiring or merging with its competitors in the same industry to achieve economies of scale or scope.

Early Supply Involvement

The practice of involving suppliers at the early stages of a product development process to leverage their expertise and insights for better outcomes.