Table 11-6 LimoZeenz and AirPorter and Are the Only Two

question 339

Multiple Choice

Table 11-6
LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 11-6 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.
-Refer to Table 11-6.Is there a dominant strategy for LimoZeenz and if so,what is it?

• A) No, its outcome depends on what AirPorter does.
• B) Yes, LimoZeenz should offer the mid-week discount.
• C) Yes, LimoZeenz should not offer the mid-week discount.
• D) Yes, LimoZeenz dominant strategy is to collude with AirPorter.

---

Definitions:

Mixed Cost

A cost composed of a fixed and variable component, changing with the level of output or activity.

Variable Cost

A cost that varies in direct proportion to changes in the level of activity or production volume.

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance.

Total Miles Driven

The cumulative distance that a vehicle has traveled, often used for business accounting or to monitor vehicle performance and maintenance needs.