Suppose that A and B benefits changed based on whether or not they work together. Imagine they are negotiating over a lease on some office space. In this case A and B would gain more from having the office space all to itself. Say, A's benefit from leasing the offices on its own is 100 while its benefit from sharing the offices with B is only 85. Similarly, B's benefit from leasing the offices on its own is 200 while its benefit from sharing the offices with A is only 175. How then do we calculate how much each party should pay when they work together? Let's go through the example when the cost is 100. We first want to calculate the pie. The pie is a. 15 b. 35 c. 50 d. 80 e. None of the above
Suppose that A and B benefits changed based on whether or not they work together. Imagine they are negotiating over a lease on some office space. In this case A and B would gain more from having the office space all to itself. Say, A's benefit from leasing the offices on its own is 100 while its benefit from sharing the offices with B is only 85. Similarly, B's benefit from leasing the offices on its own is 200 while its benefit from sharing the offices with A is only 175. How then do we calculate how much each party should pay when they work together? Let's go through the example when the cost is 100. We first want to calculate the pie. The pie is a. 15 b. 35 c. 50 d. 80 e. None of the above
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose that A and B benefits changed based on whether or not they work together. Imagine they are negotiating over a lease on some office space. In this case A and B would gain more from having the office space all to itself. Say, A's benefit from leasing the offices on its own is 100 while its benefit from sharing the offices with B is only 85. Similarly, B's benefit from leasing the offices on its own is 200 while its benefit from sharing the offices with A is only 175. How then do we calculate how much each party should pay when they work together? Let's go through the example when the cost is 100. We first want to calculate
the pie. The pie is a. 15 b. 35 c. 50 d. 80 e. None of the above
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