The Table Below Shows the Payoff Matrix in the Form

question 3

Multiple Choice

The table below shows the payoff matrix in the form of short term profits for two firms,A and B,for two different strategies,investing in new capital or not investing in new capital.Payoffs are in millions of dollars. $\begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Firm B }\\\text { Firm A }\begin{array}{|l|l|l|}\hline & \text { Invest } & \text { Not Invest } \\\hline {\text { Invest }} & \$ 20 \text { for } \mathrm{A} & \$ 70 \text { for } \mathrm{A} \\& \$ 20 \text { for } \mathrm{B} & \$ 5 \text { for } \mathrm{B} \\\hline {\text { Not Invest }} & \$ 5 \text { for } \mathrm{A} & \$ 50 \text { for } \mathrm{A} \\& \$ 70 \text { for } \mathrm{B} & \$ 50 \text { for B } \\\hline\end{array}\end{array}$
Refer to the figure above.An industrial spy comes to firm B and claims to know what firm A has decided.How much would this information be worth to firm B?

• A) $0.
• B) $50 million.
• C) $30 million.
• D) $70 million.

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Definitions:

Decrease in Demand

A situation where consumers' willingness and ability to purchase a product at all price levels declines, represented by a leftward shift of the demand curve.

Constant-cost Industry

An industry in which the input prices and production costs remain stable even as the industry output changes.

Economic Profits

The surplus remaining after total costs are subtracted from total revenue, taking into account both explicit and implicit costs.

Industry Supply

The total output of goods or services that firms in a specific industry are willing and able to sell at various price levels.