Table 14-8 Two Rival Oligopolists in the Coffee Industry, Wide Awake and Coffee

question 187

Multiple Choice

Table 14-8

Two rival oligopolists in the coffee industry, Wide Awake and Zuma, have to decide on their pricing strategy. Each can choose either a high price or a low price. Table 14-8 shows the payoff matrix with the profits that each firm can expect to earn depending on the pricing strategy it adopts.
-Refer to Table 14-8.If the firms cooperate, what prices will they select?

• A)Both firms will select a low price.
• B)Zuma will select a high price and Wide Awake will select a low price.
• C)Both firms will select a high price.
• D)Zuma will select a low price and Wide Awake will select a high price.

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Definitions:

Days Sales Outstanding

A measure of the average number of days it takes a company to collect payment after a sale has been made, indicating the effectiveness of its credit and collections policies.

Financial Condition

An overview of a company's financial health, including assets, liabilities, equity, income, and cash flows.

Market Value

The current price at which an asset or service can be bought or sold in an open market.

Book Value

The net value of an asset, calculated as its original cost minus depreciation, amortization, or impairment costs.