Figure 17-2. Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.
-Refer to Figure 17-2. If this game is played only once, then the most likely outcome is that

Question

Figure 17-2. Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. 
-Refer to Figure 17-2. If this game is played only once, then the most likely outcome is that

Quizplus · Accepted Answer

Both firms have an incentive to produce a good quality product because it results in the highest joint payoff of $8 million. If one firm produces a poor quality product while the other produces a good quality product, the firm producing the poor quality product only earns $1 million, while the other firm earns $6 million. Therefore, both firms would prefer to produce a good quality product to maximize their joint profits.