Two Partners Start a Business

question 15

Multiple Choice

Two partners start a business.Each has two possible strategies, spend full time or secretly take a second job and spend only part time on the business.Any profits that the business makes will be split equally between the two partners, regardless of whether they work full time or part time for the business.If a partner takes a second job, he will earn $20,000 from this job plus his share of profits from the business.If he spends full time on the business, his only source of income is his share of profits from this business.If both partners spend full time on the business, total profits will be $200,000.If one partner spends full time on the business and the other takes a second job, the business profits will be $80,000.If both partners take second job, the total business profits are $20,000.

• A)In the only Nash equilibrium for this game, one partner earns $60,000 and the other earns $40,000.
• B)In the only Nash equilibrium for this game, both partners earn $30,000.
• C)This game has two Nash equilibria, one in which each partner has an income of $100,000 and one in which each partner has an income of $30,000.
• D)In the only Nash equilibrium for this game, both partners earn $100,000.
• E)This game has no pure strategy Nash equilibria, but has a mixed strategy equilibrium.

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Definitions:

Cytoplasmic Division

The process, also known as cytokinesis, during which the cytoplasm of a parental cell divides to form two daughter cells.

Nuclear Division

The process by which a nucleus divides, resulting in the segregation of the genome to two daughter nuclei. This occurs via mitosis or meiosis.

Proto-oncogenes

Normal genes that can become oncogenes if mutated or expressed at high levels, potentially leading to cancer.

Tumor Suppressor Genes

Genes that help regulate cell growth and division, and can prevent the development of tumors by repairing DNA, promoting cell death, or ensuring cells do not proliferate uncontrollably.