Adam and Jon Are the Only Players Playing in a Local

question 126

Multiple Choice

Adam and Jon are the only players playing in a local golf tournament.They can either practice for 5 hours or not practice at all.Practice has both direct monetary costs and opportunity costs.Their scores for an 18-hole round of golf with and without practice are shown in the table.Total prize money is $12,000.Two possible reward structures exist.In Plan A,the low score wins $10,000,second place wins $2000,and a tie results in $6000 each.Plan B requires a player to score 71,or less,for first place,72 to 80 is considered second place.The $10,000 will be split between those with a 71 or lower score,with a guaranteed minimum of $2000.The $2000 for second will be split between those with a score between 72 and 80.
-Refer to the information above.Plan B rewards

• A) absolute performance.
• B) relative performance.
• C) absolute and relative performance.
• D) excellent performance.
• E) relatively excellent performance.

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Definitions:

Parallel Conduct

Form of implicit collusion in which one firm consistently follows actions of another.

Implicit Collusion

An understanding or arrangement among competitors where they cooperate indirectly by making similar business decisions without explicit agreement.

Cartel Activities

Actions taken by a group of independent market participants who collude to raise prices, limit supply, or control markets in some other way.

Sherman Act

A landmark federal statute in the field of United States antitrust law passed in 1890 that prohibits monopolistic practices and promotes competition.