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

question 21

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 the benefits of an activity are received by those who are not directly involved in it, _____.

• A)a negative externality exists
• B)the government is producing a free good
• C)resources are being used in their highest-valued activity
• D)the government has to compensate for the loss in social welfare
• E)a positive externality exists

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Definitions:

Market Price

The prevailing rate for transactions involving assets or services in an economic marketplace.

Earnings Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability per share.

Merger Premium

The additional amount an acquirer pays over the current market price of a target company's shares during a merger or acquisition.