Question: 8) Consider a tournament in which two identical workers get a fixed salary of a, one wins a prize S and the disutility of effort

8) Consider a tournament in which two identical workers get a fixed salary of a, one wins a prize S and the disutility of effort is E12/2. You are grading a student's answer to how to solve the firm's problem, and it seems like the student has skipped a step:

"E(Profit) = E1+ E2-2a -S = E1+ E2- 36 -Ei2

where "i" is either worker 1 or 2. "

What is the best explanation of the student's reasoning for the second equality?

Group of answer choices

It makes sense if optimal effort is 9.

It makes sense if the workers' best alternative job gives each worker a utility of 36

It makes sense if the workers' best alternative job gives each worker a utility of 18

Sheer magical thinking

This cannot possibly be correct.

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