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Naddik [55]
3 years ago
12

Two​ firms, A and B​, must each choose either a low price or a high price for their product. The payoff matrix shows the profit

each firm would make with the various price combinations. Profits are in millions of​ dollars, and Firm A​'s profit is on the left and Firm B​'s profit is on the right side of each cell.
Firm B
Low price
High price

Firm A
Low price
​5, 6
​8, 4
High price
​3, 8
​7, 7
If the firms cannot cooperate with each other and must choose​simultaneously, what price will they​ choose?

A.Both firms will choose the low price.
B. Firm A will choose the low price and Firm B will choose the high price.
C. Both firms will choose the high price.
D. Firm A will choose the high price and Firm B will choose the low price.

If the firms could cooperate with each​ other, what price would they​ choose?
A. Both firms would choose the low price.
B. Both firms would choose the high price.
C. Firm A would choose the low price and Firm B would choose the high price.
D. Firm A would choose the high price and Firm B would choose the low price
Business
1 answer:
ahrayia [7]3 years ago
4 0

Answer: 1. A.Both firms will choose the low price.

2. B. Both firms would choose the high price.

Explanation:

1. If the firms cannot cooperate with each other and must choose simultaneously, both firms will choose the low price.

This is because at the low price both of them are at the highest profit they can make when they are not cooperating. For instance, if Firm B chooses Low Price and Firm A chooses High Price, Firm A will make $3 million while Firm be will make $8 million.

If Firm B decides to have a high price then firm A will take the low price and make $8 million in profit while Firm B makes $4 million. If they are not working together, they will both have to take the low price to make the most profit.

2. If the firms could cooperate with each​ other, both firms would choose the high price.

The is because they will be making more than competing and getting a lower profit. Should they cooperate they will each get $7 million in profit because they will pick the option they can both make the highest profit at. The is better than competing and making only $5 and $6 million respectively.

If you need any clarification do comment. Cheers.

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1 year ago
In the rule-making process, the legislature allows executive agencies wide latitude to make decisions within the broad requireme
abruzzese [7]

Answer:

<em>Discretion</em>

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3 years ago
On December 31, 2017, Berclair Inc. had 200 million shares of common stock and 3 million shares of 9%, $100 par value cumulative
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Answer

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3 years ago
A bank has $500 in checking deposits. Interest and noninterest costs on these accounts are 6%. This bank has $250 in savings and
defon

Answer:

<em>13.29%</em>

<em>Explanation:</em>

Answer :- Amount in checking deposit= $500 million-15%= $425 million

Amount in saving and time deposit= $250 million-4%= $240 million

Amount in equity capital = $ 250 million

banks before tax cost of funds=

checking deposit = $425*6/100= $25.5 million

Saving and time deposit= $ 240*14/100= $ 33.6 million

equity capital=$250 *25/100= $ 62.5 million

Weighted average cost of funds (WACC)= $25.5+33.6+62.5/($425+240+250)

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3 years ago
A project will generate annual cash flows of $237,600 for each of the next three years, and a cash flow of $274,800 during the f
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The rate of return of the project is 30.36%

Explanation:

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The return rate of the project?

For finding the return rate of the project, we need to find the total cash flow generated by the project for the complete period (i.e. 4 years)

⇒Total cash flow generated= cash flow for 3 years+ cash flow for 4th year

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⇒$ 987,600

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Substituting the values-

⇒(230,000/757,600) *100

⇒30.36%  

The rate of return of the project is 30.36%

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3 years ago
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