(See Problem 2

question 25

Multiple Choice

(See Problem 2.) Robinson Crusoe has exactly 12 hours per day to spend gathering coconuts or catching fish. He can catch 3 fish per hour or he can pick 12 coconuts per hour. His utility function is U(F, C) = FC, where F is his consumption of fish and C is his consumption of coconuts. If he allocates his time in the best possible way between catching fish and picking coconuts, his consumption will be the same as it would be if he could buy fish and coconuts in a competitive market where the price of coconuts is $1, his income is

• A) $144 and the price of fish is $4.
• B) $144 and the price of fish is $.33.
• C) $36 and the price of fish is $3.
• D) $180 and the price of fish is $3.
• E) $90 and the price of fish is $.33.

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Definitions:

Cooperative Games

Cooperative games are strategic games where players can form binding agreements to cooperate and share the payoffs.

Bargaining

The process of negotiating the terms of an agreement or a deal between two or more parties.

Advertising Strategies

Planned tactics employed by businesses to persuade target audiences to purchase a product or service through various forms of media.

Dominant Strategy

Strategy that is optimal no matter what an opponent does.