Scenario 13.7 Consider the Game Below About Funding and Construction of a of a Dam

question 113

Multiple Choice

Scenario 13.7
Consider the game below about funding and construction of a dam to protect a 1,000-person town. Contributions to the Dam Fund, once made, cannot be recovered, and all citizens must contribute $1,000 to the dam in order for it to be built. The dam, if built, is worth $70,000 to each citizen.
-In the game in Scenario 13.7, the strategy pair that pays:

• A) $69,000 to each player is the only equilibrium.
• B) ($0, -$1000) is the only equilibrium.
• C) (-$1000, $0) is the only equilibrium.
• D) $0 to each player is the only equilibrium.
• E) $69,000 to each player and the strategy pair that pays $0 to each player are equilibria.

---

Definitions:

Household Production

The process by which families produce goods and services for their own use, typically including tasks such as cooking, cleaning, and childcare.

Leakages

Economic terms referring to the outflow of funds from the economy, such as savings, taxes, and imports, that can reduce the impact of investment and government spending.

Domestic Spending

The total spending on goods and services within a country, including both consumer spending and government expenditure.

Circular Flow

An economic model that illustrates the continuous movement of goods, services, and money between households and businesses.