Suppose a Particular National Park Imposes a Voluntary Contribution System

question 66

Multiple Choice

Suppose a particular national park imposes a voluntary contribution system for entrants of the park. It is suggested that all entrants pay something and there is an estimate given that $5 per user on average will be sufficient to pay for the expenses of maintaining the park. It is most likely that:

• A)everybody that enters the park will pay a sufficient amount to make sure that expenses are covered.
• B)nobody who uses the park will contribute anything and the expenses will not be covered.
• C)some users of the park will not pay anything and will act as trespassers.
• D)some users of the park will not pay anything and will act as free riders.

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Definitions:

Price-Leadership Model

A market situation where one dominant company sets the price of goods or services within an industry and other companies follow suit.

Nash Equilibrium

In game theory, the result of all players’ playing their best strategy given what their competitors are doing.

Maximin Strategy

A decision rule used in situations of uncertainty to maximize the minimum gain or to minimize the maximum loss.

Equilibrium

A state in a market or economy where supply equals demand, resulting in stable prices and quantities.