The Table Below Shows the Payoff (Profit) Matrix of Firm

question 84

Multiple Choice

The table below shows the payoff (profit) matrix of Firm A and Firm B indicating the profit outcome that corresponds to each firm's pricing strategy (where $500 and $200 are the pricing strategies of two firms) .Table 12.2

-When firms use cost-plus pricing in a market,

• A)each firm determines its price based on other firms' costs and prices.
• B)it may appear as though firms are colluding in price when they actually are not.
• C)prices of different firms diverge widely.
• D)each firm falls short of maximizing profit as they charge the same price irrespective of their costs.
• E)each firm sells only to its most-favored customer.

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Definitions:

Accruals

The accounting practice of recording revenues and expenses when they are incurred, regardless of when cash transactions happen.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term financial health and ability to cover short-term liabilities.

Dividend Yield

The ratio of a company's annual dividends per share to its current share price, indicating how much an investor gets back relative to the share price.

Working Capital Accruals

The portion of earnings not realized in cash, representing changes in working capital that affect a company's cash flow.