Suppose Marion and Gab Must Both Choose Between Two Jobs,a

question 125

Multiple Choice

Suppose Marion and Gab must both choose between two jobs,a safe job that pays $250/week and a risky job that pays $300/week.The value of safety to each is $75/week.Each also values having a higher income than the other at $75/week.Having the same job (income) as the other means no change in satisfaction.The following payoff matrix shows the income (satisfaction) each would get based on the other decision. $\begin{array}{c}\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Marion }\\\text { Gab }\begin{array}{|l|l|l|}\hline& \text { Safe Job @\$250 } & \text { Risky Job @ \$300 } \\\hline \text { Safe Job @\$250 } & \begin{array}{l}\text { Gab: \$325 } \\\text { Marion: \$325 }\end{array} & \begin{array}{l}\text { Gab: \$325 } \\\text { Marion: \$375 }\end{array} \\\hline \text { Risky Job @ \$300 } & \begin{array}{l}\text { Gab: \$375 } \\\text { Marion: \$325 }\end{array} & \begin{array}{l}\text { Gab: \$300 } \\\text { Marion: \$300 }\end{array} \\\hline\end{array}\end{array}$
Comparing the payoffs when both choose the risky job with the payoffs when both choose the safe job,

• A) both would prefer the risky job outcome.
• B) both would prefer the safe job outcome.
• C) Gab prefers the risky job outcome while Marion prefers the safe job outcome.
• D) Marion prefers the risky job outcome while Gab prefers the safe job outcome.

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Definitions:

Operating Cash Flow

The cash generated by a company's normal business operations, reflecting its ability to generate sufficient cash to meet its needs.

Net New Borrowing

Net new borrowing is the difference between the amounts a company borrows and repays during a specific period, reflecting changes in its debt level.

Net New Equity

The difference between equity capital raised by issuing new shares and the equity capital reduced by buying back shares.

Dividends Paid

Payments made by a corporation to its shareholder members, distributing a portion of the company’s earnings.