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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