(Table) Assume That Firm a and Firm B Are Oligopolies

question 184

Multiple Choice

(Table) Assume that firm A and firm B are oligopolies and both charge $20 for a product and face roughly the same costs. Firm A is considering a price decrease to $15. Profits for each firm are given in the payoff matrix (A's profits listed first, B's profits listed second) shown in the table. How will firm B react?
$\begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad {\text { Firm B's Price }} \\\begin{array}{rrrr} & &\$ 20 & \$ 15 \\\text { Firm A's Price } & \$ 20 &\$ 100,000 & \$ 60,000 \\\\& &\$ 100,000 & \$ 120,000 \\& \$15 &\$ 120,000 & \$ 80,000 \\& &\$ 60,000 & \$ 80,000\end{array}\end{array}$

Understand the distinction between open and closed systems in organizations.

Recognize different types of market and organizational failures.

Understand the role of organizational culture in achieving excellent results.

Acknowledge the importance of revenue source diversification for maintaining nonprofit autonomy.

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