The Table Given Below Represents the Payoff Matrix of Firms

question 22

Multiple Choice

The table given below represents the payoff matrix of firms A and B,when they choose to produce low or high output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs.

The information in Table 14-2 implies that the game has:

• A)a Nash equilibrium and a dominant-strategy equilibrium.
• B)a Nash equilibrium but not a dominant-strategy equilibrium.
• C)no Nash equilibrium but has a dominant-strategy equilibrium.
• D)neither a Nash equilibrium nor a dominant-strategy equilibrium.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in an open market.

Split-Off Method

A cost allocation method used in process costing that divides joint costs among different products at the point of separation.

Joint Costs

The costs incurred in the process of producing two or more products simultaneously from the same input or process.

Weighted Average Method

A method for calculating the cost of goods sold and the ending inventory value, which utilizes the average cost of all available sale items.