Suppose that Snapface and Instashot are the only two firms in a hypothetical market that produce and sell polaroid cameras. The following payoff matrix gives profit scenarios for each company (in millions of dollars), depending on whether it chooses to set a high or low price for cameras.

	Instashot Pricing
High	Low
Snapface Pricing	High	9,9	2,15
Low	15,2	8,8

For example, the lower-left cell shows that if Snapface prices low and Instashot prices high, Snapface will earn a profit of $15 million, and Instashot will earn a profit of $2 million. Assume this is a simultaneous game and that Snapface and Instashot are both profit-maximizing firms.

If Snapface prices high, Instashot will make more profit if it chooses a price, and if Snapface prices low, Instashot will make more profit if it chooses a price.

If Instashot prices high, Snapface will make more profit if it chooses a price, and if Instashot prices low, Snapface will make more profit if it chooses a price.

Considering all of the information given, pricing low a dominant strategy for both Snapface and Instashot.

If the firms do not collude, what strategies will they end up choosing?

Both Snapface and Instashot will choose a high price.

Snapface will choose a low price, and Instashot will choose a high price.

Both Snapface and Instashot will choose a low price.

Snapface will choose a high price, and Instashot will choose a low price.

True or False: The game between Snapface and Instashot is notan example of the prisoners' dilemma.

True

False