Question: Two firms, Allied Corporation and Union, Inc., compete primarily by price. Each firm must choose either a high price or a low price simultaneously. The following payoff table shows the profit each firm would earn in each of the four possible decision combinations:

1. Allied’s dominant strategy is ___________ (low price, high price, it has no dominant strategy).
2. Union’s dominant strategy is ____________ (low price, high price, it has no dominant strategy).
3. Allied’s dominated strategy is ________ (low price, high price, it has no dominated strategy).
4. Union’s dominated strategy is ____ (low price, high price, it has no dominated strategy).
5. The likely outcome of this simultaneous pricing decision is for Allied to price ________ (low, high) and for Union to price ________ (low, high).
6. The decision situation facing Allied and Union ______ (is, is not) a prisoners’ dilemma.

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