Suppose there are only two firms that sell Blu-ray players, Movietonia and Videotech. The following payoff Matrix shows the profit in millions of dollars each company will earn depending on whether it sets a high or low price for its players. For example the lower left cell shows that if Movietonia prices low and Videotech prices high, Movietonia earn a profit of $19 million and Videotech will earn a profit of $4 million. Assume this is a simultaneous game and that Movietonia and Videotech are both-profit-maximizing firms.

Videotech
Movietonia high price low price
high price 10, 10 4, 19
low price 19, 4 6, 6

If Movietonia prices high, Videotech makes more profit if it chooses a , and if Movietonia prices low, Videotech makes more profit if it chooses a .
If Videotech prices high, Movietonia makes more profit if it chooses a , and if Videotech prices low, Movietonia makes more profit if it chooses a .
Considering all of the information given, pricing high a dominant strategy for both Movietonia and Videotech.

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

a. Movietonia will choose a high price and Videotech will choose a low price.
b. Movietonia will choose a low price and Videotech will choose a high price.
c. Both Movietonia and Videotech will choose a high price
d. Both Movietonia and Videotech will choose a low price

The game between Movietonia and Videotech is an example of the prisoner's dilemma.
i. True
ii. False