Will and Grace Have Adjoining Unfenced Back Yards and Each

question 73

Multiple Choice

Will and Grace have adjoining unfenced back yards and each has just adopted a new puppy. Will values a fence between their yards at $250 and Grace values a fence between their yards at $200. The cost of building the fence is $300, which will be split equally if they both agree to build the fence. Therefore, their payoff matrix is as follows. In the Nash equilibrium of this game:

• A)Will and Grace will both build the fence and split the cost.
• B)Will will build the fence by himself.
• C)the fence will be built, but it is uncertain who will build it.
• D)no fence will be built.

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Definitions:

Wage Rate

The standard amount of pay given for work performed, typically expressed as an amount per hour or amount per piece of work completed.

Endowment

The total resources, including wealth, talent, or abilities, that individuals or institutions possess, which can influence their capacity to make economic decisions.

Alimony

Financial support paid by one ex-spouse to another after divorce, as ordered by a court.

Budget Line

A graphical representation that shows all possible combinations of two goods that a consumer can afford with their income level.