This Payoff Matrix Gives Potential Dollar Gain Values in Thousands

question 3

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 S1, 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 pessimistic because he has chosen a maximax strategy.
• B)Sam is feeling optimistic because he has chosen a maximin strategy.
• C)Sam is feeling neither pessimistic nor optimistic because he has chosen neither a maximin nor a maximax strategy.
• D)Sam is feeling both pessimistic and optimistic because he has chosen both a maximin and a maximax strategy.

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Definitions:

Perfectly Price-inelastic

A situation where the quantity demanded or supplied of a good does not change in response to a price change.

Constant Slope

Implies a uniform rate of change in one variable relative to another, represented graphically as a straight line.

Price Elasticity

The responsiveness level of the quantity of a good demanded to the price modifications of that good.

Linear Demand Curve

A graph showing a direct relationship between price and quantity demanded where the curve is a straight line.