Financial Accounting > QUESTIONS & ANSWERS > Module 4 Final Quiz: Economic Strategy and Negotiation[100% CORRECT ANSWERS) (All)

Module 4 Final Quiz: Economic Strategy and Negotiation[100% CORRECT ANSWERS)

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Question 1 1 / 1 pts Doc and Brewster are in a negotiation over royalties. The negotiations proceed as follows. Doc can make an offer that is either high (H), medium (M) or low (L). Having received ... the offer, Brewster can either accept (A) or reject (R) any offer received. The payoffs are as follows. If an offer of H is accepted, the payoffs are (30, 8) to Doc and Brewster, respectively. If an offer of H is rejected, the payoffs are (18, 16). If an offer of M is made and accepted, the payoffs are (20, 8). If an M offer is rejected the payoffs are (5, 5). If a low offer is made and accepted the payoffs are (30, 5) and if an of L is rejected the payoffs are (10, 15). In the subgame perfect equilibrium outcome Brewster receives a payoff of . 8 Question 2 1 / 1 pts Chrissie owns a vintage guitar that she values at $0. Mark would like to buy the guitar and values it at $1000. The negotiations are as follows. Chrissie suggests a price to Mark. If Mark agrees trade takes place at the agreed price. If Mark rejects the offer, Mark buys an identical guitar from Angus for a price of $400 and Chrissie receives a payoff of $0. What is the outcome of the negotiations? [Show More]

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