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

question 141

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.How are the firms in this game caught in a prisoner's dilemma?

• A) They are not in a prisoner's dilemma because there is one clear strategy for each.
• B) They would be more profitable if they refrained from offering a student discount, but each fears that if it does not offer a student discount it will lose customers.
• C) Since each firm is uncertain about the other's behavior, each will adopt a wait-and-see attitude which results in no increase in market share and no new customers.
• D) Only the first mover is caught in a prisoner's dilemma because the second has a chance to observe and respond.

Calculate and interpret accounts receivable turnover and days' sales in receivables measures.

Identify and match specific accounting terms and definitions relevant to receivables management.

Understand and explain the effects of writing off accounts receivable on the accounting equation under the direct write-off method.

Distinguish between the various methods used for estimating uncollectible accounts.

---

Definitions:

Church Doctrine

Official teachings and beliefs sanctioned by a religious institution, particularly within Christianity.

Possession

The state of having, owning, or controlling something, or in some contexts, a state in which a person is believed to be influenced or controlled by an external entity.

Nervous Breakdown

A non-medical term that signifies a period of intense mental distress, where an individual is unable to function normally in everyday life.

Mental Hygiene Movement

A movement started by Dorothea Dix (1802–1887), a Boston schoolteacher, characterized by a desire to protect and provide humane treatment for the mentally ill. Her campaign resulted directly in the opening of 32 state hospitals, including 2 in Canada. Despite the noble aims, the asylums were overcrowded and the staff had no time to do more than warehouse and restrain the patients.