The prisoner's dilemma shown displays the payoffs associated with two firms: Firm A and Firm B. These firms are in an oligopoly and they can choose to either collude or compete.
What is the profit-maximizing outcome for these firms?
A) They should both collude, acting like a monopolist.
B) They should both compete.
C) Firm A should compete and Firm B should collude.
D) Firm B should compete and Firm A should collude.
Correct Answer:
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