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

-Why do externalities arise?

• A)The costs of production are not borne by the producer.
• B)An economic activity imposes a burden on those who are not directly involved in it.
• C)The consumption of a public good is nonexcludable.
• D)The government produces goods and services which are consumed by only a particular group of people.
• E)Goods of mass consumption are not produced as they do not yield profit for the producers.

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Definitions:

Present Value

The current financial valuation of a sum of money due in the future or stream of income, based on a specific interest rate.

Future Value

The worth of an investment or cash flow at a specified future date, based on an assumed rate of growth over time.

Opportunity Cost

Opportunity cost refers to the potential benefits an individual, investor, or business misses out on when choosing one alternative over another.

Resource

In finance, a resource refers to any financial asset or input that can contribute to a firm's ability to create goods, services, or further financial gains.