Scenario: Consider the Tragedy of the Commons Problem

Multiple Choice

Scenario: Consider the tragedy of the commons problem. Suppose two firms (Row Inc. and Colm Inc.) are involved in a production process that exploits a natural resource. Each firm has two options: 1 and 2. The matrix below shows the game matrix for these two firms. The first number listed in each cell is the payoff to Row Inc., and the second number listed is the payoff to Colm Inc.

-Refer to the scenario above.If these two firms plan to operate in the long run,they will collectively be better off if ________.

A) Row Inc. chooses Strategy 1, and Colm Inc. chooses Strategy 2
B) Colm Inc. chooses strategy 1, and Row Inc. chooses Strategy 2
C) both firms choose Strategy 2
D) both firms choose Strategy 1