Figure 17-5. Two companies, ABC and QRS, are sellers in the same market. Each company decides whether to charge a high price or a low price. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.
-Refer to Figure 17-5. The situation faced by ABC and QRS is

Question

Figure 17-5. Two companies, ABC and QRS, are sellers in the same market. Each company decides whether to charge a high price or a low price. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies. 
-Refer to Figure 17-5. The situation faced by ABC and QRS is

Quizplus · Accepted Answer

A) The situation faced by ABC and QRS is one in which they are both competing in the same market and they each have to decide whether to charge a high price or a low price. This is a situation of competition and pursuing their own interests, which can lead to an outcome that is not optimal for either player, as both companies try to capture a larger market share or profit for themselves. 
B) Since both companies are pursuing their own interests, an agreement between the players to behave in a certain way is not likely to hold up or be sustainable in the long run. 
C) The situation faced by ABC and QRS is similar to the prisoners' dilemma game, in which two suspects are separately interrogated and have to decide whether to confess or remain silent. The outcomes of the game depend on the choices made by both players and the incentives they face.

Therefore, all of the above are correct and D is the best choice.