Suppose That in Enigma, Ohio, Klutzes Have a Productivity of $1,000

question 18

Multiple Choice

Suppose that in Enigma, Ohio, klutzes have a productivity of $1,000 and kandos have a productivity of $4,000 per month. You can't tell klutzes from kandos by looking at them or asking them, and it is too expensive to monitor individual productivity. Kandos, however, have more patience than klutzes. Listening to an hour of dull lectures is as bad as losing $300 for a klutz and $150 for a kando. There will be a separating equilibrium in which anybody who attends a course of H hours of lectures is paid $4,000 per month and anybody who does not is paid $1,000 per month

• A) for all positive values of H.
• B) if 10 < H < 40.
• C) if 10 < H < 20.
• D) only in the limit as H approaches infinity.
• E) if 8.33 < H < 16.67.

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Definitions:

Negotiation

The process of discussing an issue between two or more parties with the aim of reaching an agreement.

Practice Makes Perfect

A principle suggesting that repeating an activity or skill makes one more proficient or skilled at it.

Distributive Bargaining

A negotiation strategy in which parties compete over a fixed amount of value or resources, often leading to a win-lose situation.

Creative Solutions

Innovative and imaginative responses or methods designed to address problems or challenges.