A Village Has Five Residents, Each of Whom Has an Accumulated

question 86

Multiple Choice

A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat. $$\begin{array} { | c | c | c | } \hline \begin{array} { c } \text { Number af gants } \\\text { an the carmuns }\end{array} & \begin{array} { c } \text { Price per 2-year } \\\text { ald poat (5) }\end{array} & \begin{array} { c } \text { Incame per } \\\text { gant (\$/year) }\end{array} \\\hline 1 & 80 & 30 \\\hline 2 & 75 & 25 \\\hline 3 & 70 & 20 \\\hline 4 & 65 & 15 \\\hline 5 & 55 & 5 \\\hline\end{array}$$  
What is the socially optimal number of goats to be sent out onto the commons?

• A)5
• B)4
• C)3
• D)2

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Definitions:

Criminal Negligence

A reckless disregard for the safety or lives of others, which is so severe it is considered a criminal offense.

Criminal Recklessness

The act of knowingly engaging in conduct that poses a substantial and unjustifiable risk of harm to others.

Mens Rea

The legal principle referring to the criminal intent or state of mind of an individual committing a crime.

Actus Reus

The physical act of committing a crime, as opposed to the mental intent to commit the act (mens rea).