A Village Has Five Residents,each of Whom Has Accumulated Savings

question 108

Multiple Choice

A village has five residents,each of whom has accumulated savings of $50.Each villager can use the money to buy a government bond that pays 10% 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 table below. $$\begin{array} { c c c } \begin{array} { c } \text { Number of goats } \\\text { on the commons }\end{array} & \begin{array} { c } \text { Price per 2-year-old } \\\text { goat (\$) }\end{array} & \begin{array} { c } \text { Income per goat } \\\text { (\$/year) }\end{array} \\1 & 80 & 30 \\2 & 75 & 25 \\3 & 70 & 20 \\4 & 65 & 15 \\5 & 55 & 5\end{array}$$
Refer to the information given above.What will be the total village income,if every individual makes the decision that gives him or her the most private benefit?

• A)$5
• B)$125
• C)$75
• D)$25

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Definitions:

Average Tax Rate

The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), expressing the percentage of income that is paid in taxes.

Income

Monetary payment received for work, from investments, or from government benefits, contributing to an individual's wealth.

Marginal Tax Rate

The tax rate applied to the last dollar of income, showing the percentage of additional income that is paid in tax.

Income

The amount of money or value received, typically on a regular basis, for work or through investments.