This Payoff Matrix Gives Potential Dollar Gain Values in Thousands

question 89

Multiple Choice

This payoff matrix gives potential dollar gain values in thousands for strategies S1, S2, S3, and S4 for Sam's Pizza and competitive strategies CA1, CA2, and CA3 for Pam's Pizza.If Sam chooses S4, how is he feeling about the business climate? CA1 CA2 CA3
S1 13 14 7
S2 7 17 12
S3 31 29 4
S4 20 12 21

• A)Sam is feeling optimistic because he has chosen a maximax strategy.
• B)Sam is feeling pessimistic because he has chosen a maximin strategy.
• C)Sam is feeling optimistic because he has chosen a maximin strategy.
• D)Sam is feeling pessimistic because he has chosen a maximax strategy.

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Definitions:

Equilibrium Position

In the indifference curve model, the combination of two goods at which a consumer maximizes his or her utility (reaches the highest attainable indifference curve), given a limited amount to spend (a budget constraint).

Economic Resources

The land, labor, capital, and entrepreneurial ability that are used to produce goods and services; the factors of production.

Marginal Costs

The extra expense generated from the production of an additional unit of a product or service.

R&D Costs

Expenses related to the research and development activities of a company, often aimed at discovering new products or improving existing products.