Table 11-9 Alpha and Beta Are the Only Firms Selling

question 70

Multiple Choice

Table 11-9
Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 11-9 shows the payoff matrix for this game.
-Refer to Table 11-9.Does Alpha have a dominant strategy and if so,what is it?

• A) Yes, Alpha should offer a student discount.
• B) Yes, Alpha should not offer a student discount.
• C) There are two dominant strategies: if Beta offers a student discount then Alpha's best bet is to not offer a student discount, but if Beta does not offer a student discount then Alpha should offer a student discount.
• D) No, there is no dominant strategy.

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Definitions:

Sentiment Indicator

A measure or index that shows the overall attitude of investors towards a particular security or the financial market as a whole.

Confidence Index

A measure often used to gauge the sentiment or optimism among investors about the future economic outlook.

Short Interest

The aggregate amount of a specific stock's shares that investors have short sold and are yet to close or cover.

Diminishing Marginal Utility

A principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction a person gains from consuming one more unit.