The figure depicts the efficiency wage equilibrium of a worker and a firm. Based on this information, which of the following statements is correct? tsocosts Worker's best response curve 610 12 Hourly wage, 5 O This is a sequential game where the firm chooses its action given the worker's best responses to its actions. Therefore the worker receives no rent. O AIA, given that the firm pays the hourly wage of $12. the worker's best response is to exert an effort of 0.5. O The employer makes profits by coercing the worker to put in some effort O AIA, given that the worker exerts an effort level of 0.5, the firm's best response is to offer the hourly wage of $12.

The figure depicts the efficiency wage equilibrium of a worker and a firm. Based on this information, which of the following statements is correct? tsocosts Worker's best response curve 610 12 Hourly wage, 5 O This is a sequential game where the firm chooses its action given the worker's best responses to its actions. Therefore the worker receives no rent. O AIA, given that the firm pays the hourly wage of $12. the worker's best response is to exert an effort of 0.5. O The employer makes profits by coercing the worker to put in some effort O AIA, given that the worker exerts an effort level of 0.5, the firm's best response is to offer the hourly wage of $12.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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age Which of the following statements is the best description of a Nash equilibrium? Select one: O a. An equilibrium outcome achieved by cooperation between players in the game b. An outcome that is achieved when players in the game have jointly maximized profits and divided those profits according to market share of each player O c. An outcome where each player's strategy depends on the behaviour of its opponents d. An outcome where each player's best strategy is to maintain its present behaviour given the present behaviour of the other players Next page
31 Joe Low Effort Sarah Low Effort High Effort 7 7 High Effort 15 5 13 6 10 9 The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive. What payoff can we predict Joe will receive as the outcome of this game? Multiple Choice О О 5 7 О 13
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This Question: The adjacent payoff matrix has how many Nash equilibria? OA. Three O B. Two O C. Zero O D. One Firm B (B) Conduct research and development Do not conduct research and development Firm A (A) Conduct research and Do not conduct research and development development A: $2 million B: $2 million A: $6 million B: $3 million A: $4 million B: $7 million A: $1 million B: $1 million