-Figure 12

question 93

Multiple Choice

-Figure 12.2 shows the decision tree for setting price for the only two firms in a market.If both firms follow their dominant strategies

• A) both firms will set price high.
• B) both firms will set price low.
• C) only one firm will set price low.
• D) The firms' dominant strategies cannot be determined without more information.

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Definitions:

Additional Profits

Additional profits refer to the surplus income generated beyond the expected or normal income levels due to various factors, such as increased sales or reduced costs.

ROE

Return on Equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested.

Total Assets

The sum of all current and non-current assets owned by a company, indicated on the balance sheet, representing the total resources available to a company.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholder equity.