In the Problem Discussed in Your Workbook, the Cost of Capturing

question 25

Multiple Choice

In the problem discussed in your workbook, the cost of capturing a cockatoo and transporting him to the United States is about $40 per bird.Cockatoos are drugged and smuggled in suitcases to the United States.Half of the smuggled cockatoos die in transit.Each smuggled cockatoo has a 10% probability of being discovered, in which case the smuggler is fined.If the fine imposed for each smuggled cockatoo is increased to $1,200, then the equilibrium price of cockatoos in the United States will be

• A)$100.
• B)$160.
• C)$76.
• D)$355.56.
• E)$266.67.

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Definitions:

Demand

The desire coupled with the purchasing power for specific goods or services in a given economic marketplace.

Income

Money received on a regular basis from work, investments, business, etc., used to fund a person’s living expenses.

Video Tapes

An outdated magnetic tape storage format for recording analog audio and analog video signals, typically used for consumer video recording.

Garbage

Waste material that is discarded by humans, typically due to its inability to be used again or lack of perceived value.