William Owns a Car That He Values at $3000

question 2

Multiple Choice

William owns a car that he values at $3000.Jackson values the car at $5000.The negotiations between them for a potential trade are as follows: William offers a price to Jackson.If Jackson accepts, trade takes place at that price.If Jackson rejects, bargaining proceeds to the next round in which Jackson gets to make a price offer to William.At this point, if William accepts, trade takes place at the price suggested by Jackson.If William rejects the offer, no trade takes place between them.William keeps the car and Jackson gets a payoff of $0.Given the equilibrium outcome of the negotiations, what are the realized gains from trade?

• A)$5000
• B)$4000
• C)$3000
• D)$2000
• E)$1000

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Definitions:

Weekly Hours

The number of hours scheduled for work or assignment within a week.

Telecommuting Program

A work arrangement that allows employees to perform their job duties from outside the traditional office environment, often from home, facilitated by technological tools.

Satellite Office

denotes a secondary office located away from a company's main office, used to accommodate remote employees or serve different geographical areas.

Compressed Workweek

A flexible work schedule allowing employees to work longer hours on some days and fewer on others, completing a full workweek in fewer days.