ZOPA stands for Zone of Possible Agreement. What does it describe?

• A. The area of overlap between each party's bargaining ranges.
• B. The minimum acceptable offer for each party.
• C. The total value of the deal.
• D. The time pressure to reach agreement.

Answer: (A)

ZOPA is the range where both sides would be willing to settle, meaning the overlap between their acceptable offers. Each party has a bargaining range defined by what they can accept (their reservation price) and what they’d ideally like to get (their target). A deal is possible only if the buyer’s maximum price and the seller’s minimum acceptable price cross or meet, creating a zone where offers are acceptable to both. If there’s no overlap, no agreement is possible without someone moving beyond their reservation point. So the area of overlap between the parties’ bargaining ranges best describes ZOPA.