(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.

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Definitions:

Snow-Day

Typically refers to a day on which work or school is canceled due to excessive snowfall or hazardous weather conditions.

Activity Variance

The discrepancy between budgeted activity levels and actual activity levels, impacting the allocation of overhead costs.

Other Expenses

Costs not directly related to core business operations, including interest payments or losses from selling assets.

Activity Variance

The difference between the budgeted cost of activities and the actual cost incurred.