The Following Table Lists the Payoffs for Firm 1 and Firm

question 13

Multiple Choice

The following table lists the payoffs for Firm 1 and Firm 2 from three possible pricing strategies:
Table 10-3
$\begin{array}{l}\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Firm } 2\\\begin{array} { | c | c | c | c | } \hline \text { Firm 1 } & \text { High } & \text { Medium } & \text { Low } \\\hline \text { High } & 3,1 & 4,2 & 2,0 \\\hline \text { Medium } & 2,3 & 5,5 & 3,4 \\\hline \text { Low } & 5,4 & 7,5 & 5,2 \\\hline\end{array}\end{array}$
-Refer to Table 10-3. Identify Firm 1's dominant strategy.

• A) Its dominant strategy is medium prices.
• B) Firm 1 does not have a dominant strategy.
• C) Its dominant strategy is high prices.
• D) Its dominant strategy could be low or medium prices depending on Firm 2's response.
• E) Its dominant strategy is low prices.

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Definitions:

Standard Cost Formula

A predefined cost based on historical data, industry standards, and projected material, labor, and overhead costs, used for budgeting and cost management.

Level Of Activity

A measure of the amount of work performed or production achieved in a specific period of time, often related to capacity utilization in operations management.

Fixed Cost

Expenses that do not change with the level of output or sales in the short term, such as rent or salaries.

Manufacturing Overhead

Every supplementary cost related to the manufacturing process, apart from direct materials and labor expenses.