Two Partners Start a Business

question 16

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 $60,000 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, both partners earn $70,000.
• B)In the only Nash equilibrium for this game, one partner earns $100,000 and the other earns $40,000.
• C)In the only Nash equilibrium for this game, both partners earn $100,000.
• D)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 $70,000.
• E)This game has no pure strategy Nash equilibria, but has a mixed strategy equilibrium.

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Definitions:

Manufacturing

The process of converting raw materials, components, or parts into finished goods that meet a customer's expectations or specifications.

Advanced Metals

Metals that have been engineered or processed to have superior properties, such as strength, durability, or conductivity, for use in advanced technologies.

Technological Advancements

are the improvements and innovations in technology that enhance efficiency, productivity, and quality of life, often leading to new products, processes, and services.

Textiles

Materials made from fibers, threads, or yarns, designed for use in fabric production, including clothing, household items, and industrial goods.