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Two roommates (Jen and Kate) can choose whether to clean their apartment (C) or leave it dirty (D). Jen's cost of cleaning is c, but
- Two roommates (Jen and Kate) can choose whether to clean their apartment (C) or leave it dirty (D). Jen's cost of cleaning is c, but Kate doesn't mind cleaning and has no cost. [Recall that their payoffs are (Jen, Kate)]
Kate
D C
Jen D (4 , 4) (6, 7)
C (6-c, 7) (7-c, 10)
a. [6 marks] Determine for what values of c this game's equilibrium is for both players to clean. For what c values is this equilibrium efficient? Explain your answer.
b. [6 marks] Determine for what values of c this game's equilibrium is for only Kate to clean. For what c values is this equilibrium efficient? Explain your answer.
c. [3 marks] Given your answers above, when will we expect that Jen and Kate will
fail to have an apartment that is "sufficiently clean" from a social perspective?
A cereal manufacturing company displays the following information related to the month of June. Material Labour Overheads Preparing grains Cooking Drying $100,000 $30,000 $20,000 $70,000 $40,000 $30,000 $30,000 $30,000 $100,000 Additional information on drying process 80,000 units were started in June by the drying department. There were 10,000 units in WIP from May and these were 40% complete. The value of this opening WIP inventory was $12,000; this is made up of $2,000 of DM cost and $10,000 of conversion costs. . Assume this WIP is 40% complete in relation to consumption of DL and OH, but each unit has 100% of its DM requirement since all packaging materials are made available (or added) at the beginning of the process. (This is a common assumption in process costing). At the end of June, there were 4,000 partially completed units and these were 70% converted (but contained 100% of their DM)
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Step: 1
Finding Equilibrium Well analyze each scenario both cleanonly Kate cleans and see when it becomes the best option for each player a Both Clean C C For Jen to choose C7c her payoff when both clean must ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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