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

question 31

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 Beta have a dominant strategy and if so,what is it?

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

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Definitions:

Fixed Costs

Business expenses that remain constant regardless of the level of goods or services produced.

Fixed Costs

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Units

Refers to a standard quantity or measurement used for comparison and calculation, such as in physics or mathematics.