George Is Debating Whether to Concentrate on Playing Professional Football

question 45

Multiple Choice

George is debating whether to concentrate on playing professional football or professional baseball. He is offered $6 million a year to play baseball and $7 million a year to play football. If he chooses to play football,

• A) the economic rent in his salary is $7 million.
• B) the economic rent in his salary is $6 million.
• C) the economic rent in his salary is $1 million.
• D) the economic rent in his salary is $13 million.

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Definitions:

Competitor's Intentions

The strategic plans and actions that a business's rivals aim to undertake to gain a competitive advantage.

Nash Equilibrium

A concept in game theory where all participants are assumed to know the equilibrium strategies of the others, and no player has anything to gain by changing only their own strategy.

Payoff

The return or reward received as a result of making a particular decision or action, often used in the context of game theory and economics.

Efficient Outcome

In economics, a scenario where resources are allocated in a way that maximizes productivity and utility, leaving no room for improvement without making someone worse off.