Question

Marco and Lisette love to play​ darts, but both suffer from carpal tunnel syndrome due to excessive play. They are considering how many visits to make to the​ doctor, and both know that they each get​ $150 of relief from the first​ visit, and only​ $45 of additional relief from the second visit. Neither has health insurance and therefore will bear the full cost of medical care. Each visit to the doctor costs​ $75. Marco's dominant strategy will give him a net benefit of
A. $45

B. $75

C. $120

D. $150

Answer 1

Answer:

The answer is: B) $75

Explanation:

Marco and Lisette should both only go once to the doctor (ophthalmologist) since the first visit will give both of them $75 in net benefit. We can calculate their net benefit by subtracting the cost of the doctor's visit from the benefit each of them gets by visiting the doctor: $150 - $75 = $75.

If any of them decided to go to the doctor twice, then they would have negative utility, since the cost of visiting the doctor would be larger than the benefit obtained form visiting him: $45 - $75 = -$30.