A Small Community Has 10 People, Each of Whom Has

question 6

Multiple Choice

A small community has 10 people, each of whom has a wealth of $17,000.Each individual must choose whether to contribute $200 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 .80 times the total amount of money contributed by individuals in the community.

• A)This game has two Nash equilibria, one in which everybody contributes $200 and one in which nobody contributes $200.
• B)This game has a dominant strategy equilibrium in which all 10 citizens contribute $200 to support public entertainment.
• C)This game has a Nash equilibrium in which 5 people contribute $200 and for public entertainment and 5 people contribute nothing.
• D)This game has no Nash equilibrium in pure strategies, but has a Nash equilibrium in mixed strategies.
• E)This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, indicative of the cost per unit of output.

Total Cost

The combined total of all costs associated with generating goods or services, covering both fixed and variable expenses.

Price of Labor

The wage rate paid to employees, essentially the cost of labor to employers.

AVC Curve

A graph that shows the average variable costs of production at different levels of output.