A Reaction Function Is

question 190

Multiple Choice

A reaction function is

• A) companies colluding in order to make higher than competitive rates of return.
• B) the manner in which one oligopolist reacts to a change in price made by another oligopolist in the industry.
• C) a game in which firms will not negotiate in any way.
• D) when plans made by firms are known as game strategies.

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Definitions:

Prime Cost

The sum of direct materials cost and direct labor cost, representing the direct production costs.

Cost Structure

The composition of different types of costs within a company or specific project, often categorized into fixed and variable costs.

Contribution Margin

The amount of revenue remaining after deducting variable costs, which can then be used to cover fixed costs and contribute to profit.

Product Mix

The variety of products that a company produces or sells, considering the diversity in type, size, and quality.