Use the Table Below to Answer the Following Questions

question 2

Multiple Choice

Use the table below to answer the following questions.
Table 15.2.5

-Refer to Table 15.2.5. Two software firms have developed an identical new software application. They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dollars. What is Firm 1's best strategy?

• A)Give away the application regardless of what Firm 2 does.
• B)Sell the application at $30 a copy regardless of what Firm 2 does.
• C)Give away the application only if Firm 2 sells the application.
• D)Give away the application only if Firm 2 gives away the application.
• E)Sell the application only if Firm 2 sells the application.

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Definitions:

Photo-prints

Photographic images produced on paper or other substrates from digital or film originals.

Industrial Photo-finishing

Refers to the commercial process of developing and printing photographic images on a large scale, typically for businesses.

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, indicating how much contributes towards fixed costs and profit.

Break-Even Point

The level of sales or production at which a business's revenues exactly cover its expenses, leading to neither profit nor loss.