When One Firm Makes a Credible Commitment to Another Firm,it

question 108

Multiple Choice

When one firm makes a credible commitment to another firm,it is doing all of the following EXCEPT:

• A) Creating trust between the firms.
• B) Making a long-term strategic decision.
• C) Offering a promise that it will perform in the future.
• D) Sharing the risk and costs.

---

Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing additional gain over and above normative expectations.

ATC

Average Total Cost, which is calculated by dividing the total cost by the quantity of output produced.

Economic Profit

The surplus or profit remaining after deducting both explicit and implicit costs, including opportunity costs, from total revenues.

Interest Rate

The percentage charged on a loan or paid on deposits over a specific period of time, often annually.