Scenario 6

Multiple Choice

Scenario 6.1: Tasha and Gloria are friends who each produce beaded headbands. Each can choose to work somewhat hard and expend $10 worth of effort, or can work extremely hard and expend $15 worth of effort. If either works somewhat hard, she can produce headbands that sell for a total of $22. If either works extremely hard, she can produce headbands which sell for a total of $30. Both Tasha and Gloria are equally good at making beaded headbands.
-Refer to Scenario 6.1. Suppose the friends are forced by government to combine their businesses and share what they make. With this revision to the scenario, the Nash equilibrium occurs where

A) both Tasha and Gloria work extremely hard.
B) both Tasha and Gloria work somewhat hard.
C) Both A and B represent Nash equilibria.
D) There is not a Nash equilibrium in this scenario.