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

question 4

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

-Why do market failures arise in case of public goods?

• A)The quantity produced is much more than is actually required by the people.
• B)The quality of these goods is not good enough.
• C)The quantity produced is too less from the society's point of view.
• D)The government wastes a lot of resources for producing a public good.
• E)The users of such goods are required to pay a high price for these goods.

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Definitions:

Profit Margin

A financial metric that measures the percentage of revenue that exceeds the cost of goods sold, indicating the efficiency of a company in managing its costs and profit generation.

Retained Earnings

Retained earnings are the portion of a company's profits that are kept or retained within the company rather than paid out to shareholders as dividends, often used for reinvestment in the business or to pay down debt.

Marginal Tax Rate

The rate of tax applied to your next dollar of income, used in progressive tax systems where tax rates increase as income rises.

Percentage Of Sales Approach

Financial planning method in which accounts are projected depending on a firm’s predicted sales level.