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Country A's payoff If majority invest If majority does not invest Country A does not invest Country A invest 1. -1 Consider the development of an Eco-triendly technology. Success will only be achieved if the majority of countries in the world decide to participate in this development process f only a small portion of counties invest in this project, no success will be achieved, any investment would be meaningless. Assume all the decisions aro made on the country level, no cross-country communication is involved. 1. H you are the decision-maker for country A, based on the payoff table above, what decision will you make ( invest or not )? (Please briefly describe your decision-making process.) 2. In the end, will this technology be developed successfully? Why. 3. What adjustments or changes ou would suggest in order for this technology to be developed successfully? For the toolbar, press ALT F10 (PC) or ALT+FN+F10 (Mac).

Country A's payoff If majority invest If majority does not invest Country A does not invest Country A invest 1. -1 Consider the development of an Eco-triendly technology. Success will only be achieved if the majority of countries in the world decide to participate in this development process f only a small portion of counties invest in this project, no success will be achieved, any investment would be meaningless. Assume all the decisions aro made on the country level, no cross-country communication is involved. 1. H you are the decision-maker for country A, based on the payoff table above, what decision will you make ( invest or not )? (Please briefly describe your decision-making process.) 2. In the end, will this technology be developed successfully? Why. 3. What adjustments or changes ou would suggest in order for this technology to be developed successfully? For the toolbar, press ALT F10 (PC) or ALT+FN+F10 (Mac).

Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter19: Labor And Entrepreneurship: The Human Inputs
Section: Chapter Questions
Problem 14DQ
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Country A's payoff If majority invest If majority does not invest Country A invest Country A does not invest -1 Consider the development of an Eco-triendly technology. Success will only be achieved if the majority of countries in the world decide to participate in this development process If only a small portion of counties invest in this projoct, no success will be achieved, any investment would be meaningless. Assume all the decisions aro made on the country levoi, no cross-country communication is involved. 1. If you are the decision-maker for country A, basod on the payoff table above, what decision will you make ( invest or not )? (Pleaso briefly describe your decision-making process.) 2. In the end, will this technology be developed successfully? Why. 3. What adjustments or changes ou would suggest in order for this tochnology to be devoloped successfully? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Transcribed Image Text:Country A's payoff If majority invest If majority does not invest Country A invest Country A does not invest -1 Consider the development of an Eco-triendly technology. Success will only be achieved if the majority of countries in the world decide to participate in this development process If only a small portion of counties invest in this projoct, no success will be achieved, any investment would be meaningless. Assume all the decisions aro made on the country levoi, no cross-country communication is involved. 1. If you are the decision-maker for country A, basod on the payoff table above, what decision will you make ( invest or not )? (Pleaso briefly describe your decision-making process.) 2. In the end, will this technology be developed successfully? Why. 3. What adjustments or changes ou would suggest in order for this tochnology to be devoloped successfully? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).
Effort Investment Risk Farmer's ownership Fixed land rental Sharecropping Farmer E's production function is Y = 20 x VI (Yis the final output, Lis labor input) According to theory, E's offort will be the lowest under which ownership? ( you should be able to answer this question without caiculation) According to theory, E will be facing the lowest level of risk under which land ownership? Why? Assuming E is working under a fixed land rental contract, with a yearly rent of 50. His twin brother F, who has exactly the same production function, is working with a different landlord who charges 20% of the yearly revenue. • (calculation) What is farmer E's profit function? (calculation) What is his brother F's objective function? • How is the optimal effort defined? ( only explain the concept) • (calculation) How much labor would E invest in his land (He knows exactly how his profit function looks like )? How much profit could he make under optimal effort? • Assume his twin brother F doesn't know how to optimize his resource like E, instead, F decides to just copy E's behavior (F put in the same amount of effort into his land as E). Will this decision bring F the same level of profit as E? • (calculation) E decides to help his brother out by suggesting a proper effort level based on F's sharecropping contract, what would the suggested labor input be?
Transcribed Image Text:Effort Investment Risk Farmer's ownership Fixed land rental Sharecropping Farmer E's production function is Y = 20 x VI (Yis the final output, Lis labor input) According to theory, E's offort will be the lowest under which ownership? ( you should be able to answer this question without caiculation) According to theory, E will be facing the lowest level of risk under which land ownership? Why? Assuming E is working under a fixed land rental contract, with a yearly rent of 50. His twin brother F, who has exactly the same production function, is working with a different landlord who charges 20% of the yearly revenue. • (calculation) What is farmer E's profit function? (calculation) What is his brother F's objective function? • How is the optimal effort defined? ( only explain the concept) • (calculation) How much labor would E invest in his land (He knows exactly how his profit function looks like )? How much profit could he make under optimal effort? • Assume his twin brother F doesn't know how to optimize his resource like E, instead, F decides to just copy E's behavior (F put in the same amount of effort into his land as E). Will this decision bring F the same level of profit as E? • (calculation) E decides to help his brother out by suggesting a proper effort level based on F's sharecropping contract, what would the suggested labor input be?
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