The Figure Shown Represents the Payoffs Involved When Sarah and Joe

question 106

Multiple Choice

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.According to the figure, if Sarah puts forth low effort, then Joe should:

• A)put forth high effort.
• B)put forth low effort.
• C)refrain from making a decision.
• D)convince Sarah to put forth high effort.

---

Definitions:

Progressive Tax

A tax system in which the tax rate increases as the taxable amount increases, thus higher income earners pay a larger percentage of their income in taxes.

Libertarians

Individuals who advocate for minimal government intervention in the personal and economic lives of citizens, emphasizing individual liberty and free-market principles.

Diminishing Marginal Utility

A principle stating that as consumption increases, the marginal utility derived from each additional unit declines.

Negative Tax

A form of subsidy where the government pays individuals or entities rather than collecting taxes, aimed at providing financial assistance.