-Suppose MCI and AT&T Can Each Charge Either 3¢ or 4¢

question 35

Multiple Choice

-Suppose MCI and AT&T can each charge either 3¢ or 4¢ a minute for a long distance call. The above table illustrates the payoffs, in millions of dollars, from each of the four possible outcomes that could occur in their duopoly setting. What must MCI's price be for AT&T to earn $500 million in profit?

• A)4¢ a minute
• B)3¢ a minute
• C)0¢ a minute
• D)either 4¢ or 3¢ a minute because AT&T earns $500 million in profit either way
• E)None of the above answers is correct because the payoff matrix shows that it is not possible for AT&T to earn $500 million in profit

Identify the different types of buying situations: new buy, modified rebuy, and straight rebuy.

Recognize the influence and importance of gatekeepers in the buying process.

Analyze how influencers affect the buying decision by defining specifications.

Distinguish between deciders and buyers in organizational purchasing decisions.

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Definitions:

Private Contract

An agreement between private parties that creates mutual obligations enforceable by law.

Pollution Permits

Tradable permits issued by governments that allow the holder to emit a certain amount of pollution; used to control and reduce environmental harm.

Corrective Taxes

Taxes designed to internalize externalities, typically by charging for negative externalities to correct market outcomes.

Internalize

The process of incorporating the cost of externalities into the decision-making processes of relevant parties, often through regulation or market-based incentives.