Big Pig and Little Pig Have Two Possible Strategies, Press

question 2

Multiple Choice

Big Pig and Little Pig have two possible strategies, Press the Button, and Wait at the Trough.If both pigs choose Wait, both get 3.If both pigs Press the Button, then Big Pig gets 9 and Little Pig gets 1.If Little Pig Presses the Button and Big Pig Waits at the Trough, then Big Pig gets 10 and Little Pig gets 0.Finally, if Big Pig Presses the Button and Little Pig Waits, then Big Pig gets 4 and Little Pig gets 1.In Nash equilibrium,

• A)Little Pig will get a payoff of 1 and Big Pig will get a payoff of 4.
• B)Little Pig will get a payoff of 1 and Big Pig will get a payoff of 9.
• C)both pigs will wait at the trough.
• D)Little Pig will get a payoff of zero.
• E)the pigs must be using mixed strategies.

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Definitions:

Cash Cycle

The period between the purchase of inventory and the collection of accounts receivable from the sale of that inventory.

Inventory Period

The typical duration required for a firm to convert its stock into revenue.

Accounts Receivable Turnover

A financial metric that measures how often a company collects its average accounts receivable balance in a period.

Accounts Payable Turnover

A financial ratio that measures the rate at which a company pays off its suppliers by dividing total purchases by average accounts payable for the period.