Abbott and Costello Are Two Firms That Compete with Each

question 44

Multiple Choice

Abbott and Costello are two firms that compete with each other in the market for ice-cream.They can price their product at a high,medium,or low price.The following matrix shows their profits from their respective pricing strategies.
Table 15-3
-Refer to Table 15-3.When Abbott chooses the high-pricing strategy,Costello's highest possible profit is:

• A)$115
• B)$100
• C)$107
• D)$21

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Definitions:

Production Data

Information related to the amount, type, and quality of goods or services produced.

Contribution Margin

A financial metric that represents the difference between the sales revenue of a product and the variable costs associated with producing that product.

Break-Even Point

The financial position at which total revenues equal total costs and expenses, with no net profit or loss, often used to analyze the viability of a business or project.

Variable Cost

Costs that change in proportion to the level of goods or services that a business produces, as opposed to fixed costs which remain constant regardless of production volume.