-Figure 11-13 Shows the Payoff Matrix for the Only Two

question 113

Multiple Choice

-Figure 11-13 shows the payoff matrix for the only two auto dealerships in a community,Jim's Autos and Tim's Autos.The matrix shows the profits that each firm would earn from choosing either a low price or a high price.In this example,

• A)both firms would be best off if they charged a low price
• B)there is no equilibrium to the market
• C)both firms would be best off if they charged a high price
• D)both firms will go out of business in the long run
• E)the market is more efficient than a perfectly competitive market

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Definitions:

FIFO

FIFO (First-In, First-Out) is an inventory cost valuation method assuming that the oldest items of inventory are sold first and newer inventories last, affecting the cost of goods sold and ending inventory valuation.

LIFO

Last In, First Out, an inventory valuation method that assumes goods purchased last are the first to be used or sold, affecting cost of goods sold and inventory value.

Average

A statistical measure that denotes the central value of a set of numbers.

Dollar-Value LIFO

An inventory valuation method that uses the last-in, first-out (LIFO) principle but measures inventory in dollar amounts rather than in physical units.