The Reason Individual Homeowners Usually Do Not Hire a Private

question 160

Multiple Choice

The reason individual homeowners usually do not hire a private contractor to fill the potholes on their street is because:

• A) it costs too much.
• B) the value to the neighborhood exceeds the cost of repair.
• C) others who use the street will be free riders.
• D) they do not trust the government.
• E) there are negative externalities associated with the repair.

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Definitions:

Nash Equilibria

A concept in game theory where no participant can gain by unilaterally changing their strategy if the strategies of others remain unchanged.

Maximin Strategy

In decision-making and game theory, a strategy which maximizes the minimum gain that can be achieved, focusing on the most favorable outcome of the worst possible scenarios.

Entry-Deterrence

Strategies employed by existing firms in a market to prevent or discourage new competitors from entering the market.

Sunk Costs

Expenses that have already been incurred and cannot be recovered, often considered in decision-making processes.