Suppose That the Cost of Capturing a Cockatoo and Transporting

question 5

Multiple Choice

Suppose that 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 $1,000, then the equilibrium price of cockatoos in the United States will be

• A)$140.
• B)$90.
• C)$70.
• D)$311.11.
• E)$222.22.

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Definitions:

Greater Percentage

A proportion or share expressed as a fraction of 100 that is larger relative to a comparison figure or within a total.

Gross Investment

Total amount spent on new capital assets without deductions for depreciation.

Rose/Fell

Terms used to indicate an increase (rose) or a decrease (fell) in a numerical value or metric.

GDP

GDP measures the aggregate value of all goods and services made within the confines of a nation over a specified period.