Adam and Jon are the only players playing in a local golf tournament.They can either practice for 5 hours or not practice at all.Practice has both direct monetary costs and opportunity costs.Their scores for an 18-hole round of golf with and without practice are shown in the table.Total prize money is $12,000.Two possible reward structures exist.In Plan A,the low score wins $10,000,second place wins $2000,and a tie results in $6000 each.Plan B requires a player to score 71,or less,for first place,72 to 80 is considered second place.The $10,000 will be split between those with a 71 or lower score,with a guaranteed minimum of $2000.The $2000 for second will be split between those with a score between 72 and 80.
-Refer to the information above.If the tournament adopts Plan A as its reward structure,then
A) Jon and Adam will not practice.
B) a positional externality will exist.
C) Jon will not practice but Adam will.
D) Adam will not practice but Jon will.
E) Adam will only practice if Jon does,otherwise not.

Question

Adam and Jon are the only players playing in a local golf tournament.They can either practice for 5 hours or not practice at all.Practice has both direct monetary costs and opportunity costs.Their scores for an 18-hole round of golf with and without practice are shown in the table.Total prize money is $12,000.Two possible reward structures exist.In Plan A,the low score wins $10,000,second place wins $2000,and a tie results in $6000 each.Plan B requires a player to score 71,or less,for first place,72 to 80 is considered second place.The $10,000 will be split between those with a 71 or lower score,with a guaranteed minimum of $2000.The $2000 for second will be split between those with a score between 72 and 80. 
-Refer to the information above.If the tournament adopts Plan A as its reward structure,then
A) Jon and Adam will not practice. 
B) a positional externality will exist. 
C) Jon will not practice but Adam will. 
D) Adam will not practice but Jon will. 
E) Adam will only practice if Jon does,otherwise not.

Quizplus · Accepted Answer

A positional externality exists when the actions of one participant affect the outcomes or payoffs of others, which is likely in a competitive tournament setting with a reward structure like Plan A.

Adam and Jon Are the Only Players Playing in a Local