(See Problem 2

question 12

Multiple Choice

(See Problem 2.) A small community has 10 people, each of whom has a wealth of $5,000. Each individual must choose whether to contribute $300 or $0 to the support of public entertainment for their community. The money value of the benefit that a person gets from this public entertainment is b times the total amount of money contributed by individuals in the community.

• A) This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.
• B) If 10b > 1, everybody is better off if all contribute to the public entertainment fund than if nobody contributes, but if 10b < 1, everybody is better off if nobody contributes than if all contribute.
• C) If 10b > 1, there is a dominant strategy equilibrium in which everybody contributes.
• D) Everybody is worse off if all contribute than if nobody contributes if b > 1, but if b < 1, everybody is better off if nobody contributes.
• E) In order for there to be a dominant strategy equilibrium in which all contribute, it must be that b > 10.

---

Definitions:

Production Budget

A production budget is a financial plan that estimates the number of units to be produced to meet anticipated sales demand.

Sales Budget

A detailed projection of a company’s sales revenue for a certain period, often used as a basis for production, purchasing, and staffing plans.

Service Firm

A business that provides intangible products or services to customers, as opposed to selling physical goods.

Products Purchase

The expenditure a company makes to buy goods that will be sold to its customers.