Table 11-10 Ming and Henri Each Run One of the Two Dry

question 377

Multiple Choice

Table 11-10
$\begin{array}{c}\text { Ming }\\\text { Henri }\begin{array}{|l|l|l|}\hline & \begin{array}{l}\text { offers free pickup } \\\text { and delivery }\end{array} & \begin{array}{l}\text { does not offer free pickup } \\\text { and delnvery }\end{array} \\\hline \begin{array}{l}\text { offers free pickup } \\\text { and delivery }\end{array} & \begin{array}{l}\text { Ming } \$ 20,000 \\\text { Henri: } \$ 50,000\end{array} & \begin{array}{l}\text { Ming } \$ 10,000 \\\text { Henri } \$ 25,000\end{array} \\\hline \begin{array}{l}\text { does not offer free pickup } \\\text { and delivery }\end{array} & \begin{array}{l}\text { Ming } \$ 30,000 \\\text { Henri: } \$ 40,000\end{array} & \begin{array}{l}\text { Ming } \$ 15,000 \\\text { Henri } \$ 45,000\end{array} \\\hline\end{array}\end{array}$
Ming and Henri each run one of the two dry cleaning facilities in the town of Scaraby.Both consider offering free pickup and delivery services. Table 11-10 shows the payoff matrix containing the expected quarterly profits for each firm.
-Refer to Table 11-10.What is the Nash equilibrium in this game?

• A)There is no Nash equilibrium.
• B)Ming offers free pickup and delivery, but Henri does not.
• C)Henri offers free pickup and delivery, but Ming does not.
• D)Both Ming and Henri offer free pickup and delivery.

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Definitions:

Variable Cost

Costs that fluctuate in direct proportion to production or sales figures, including items like direct labor and raw materials.

Mixed Costs

Expenses comprising both fixed and variable components, changing in total with the level of activity but not proportionately.

Merchandising Firm

A business that purchases finished goods for resale in order to make a profit, differentiating itself from manufacturing firms and service firms.

Gross Margin

The difference between sales revenue and the cost of goods sold, expressed as a percentage of sales revenue.