-The Above Figure Shows the Payoff to Two Airlines,A and B,of

question 48

Multiple Choice

-The above figure shows the payoff to two airlines,A and B,of serving a particular route.If the two airlines must decide simultaneously,which one of the following statements is TRUE?

• A) Since firm B has no dominant strategy, its decision is unpredictable.
• B) Since firm B's decision is unpredictable, firm A's decision is unpredictable.
• C) Neither firm entering is a Nash equilibrium.
• D) Firm B will not enter because it knows firm A will.

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Definitions:

Direct Labor-Hours

The total hours of work directly contributed by laborers to produce goods or services.

Manufacturing Overhead

The indirect costs involved in making a product, excluding direct materials and direct labor expenses.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, computed in advance for each period.

Traditional Costing

An accounting method that allocates overhead costs to products based on a single, volume-based cost driver, such as direct labor hours.