Table 14-8 Two Rival Oligopolists in the Athletic Supplements Industry, the Power

question 68

Multiple Choice

Table 14-8

Two rival oligopolists in the athletic supplements industry, the Power Fuel Company and the Brawny Juice Company, 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 Brawny Juice selects a high price, what is Power Fuel's best strategy and what will Power Fuel earn as a result of this strategy?

• A)Power Fuel will select a low price and earn $8 million.
• B)Power Fuel will select a low price and earn $16 million.
• C)Power Fuel will select a high price and earn $12 million.
• D)Power Fuel will select a high price and earn $16 million.

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Definitions:

Sales Growth

The increase in revenue generated from sales activities over a specific period, indicating the success of business strategies and market demand.

Product Time to Market

The duration it takes for a product to move from conception to being available for sale to consumers.

Return on Assets

A financial ratio that indicates the profitability of a company in relation to its total assets.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the operating cycle, whichever is longer.