Use the Following Information to Answer Question

question 133

Multiple Choice

Use the following information to answer question:
Suppose that you are a manager.You are considering whether or not to monitor employees with the payoffs in the following normal form game.
-Management and a labor union are bargaining over how much of a $50 surplus to give to the union.The $50 is divisible up to one cent.The players have one-shot to reach an agreement.Management has the ability to announce what it wants first, and then the labor union can accept or reject the offer.Both players get zero if the total amounts asked for exceed $50.Which of the following is not a Nash equilibrium?

• A)Management requests $50 and the labor union accepts $0.
• B)Management requests $30 and the labor union accepts $10.
• C)Management requests $25 and the labor union accepts $25.
• D)Neither management requesting $50 and the labor union accepting $0 nor management requesting $30 and the labor union accepting $10 are Nash equilibria.

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Definitions:

Payroll Tax

Contributions demanded from employers or their staff, often pegged to a percentage of the paychecks disbursed to employees.

Equilibrium Wage

The wage rate at which the quantity of labor demanded by employers equals the quantity of labor supplied by workers.

Payroll Tax

A tax imposed on employers or employees, and is usually calculated as a percentage of the salaries that employers pay their staff.

Tax Collections

The process by which governmental authorities, such as the IRS in the United States, collect taxes from individuals and businesses.