A Small Community Has 10 People, Each of Whom Has

question 24

Multiple Choice

A small community has 10 people, each of whom has a wealth of $2,000.Each individual must choose whether to contribute $100 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 .65 times the total amount of money contributed by individuals in the community.

• A)This game has a dominant strategy equilibrium in which all 10 citizens contribute $100 to support public entertainment.
• B)This game has two Nash equilibria, one in which everybody contributes $100 and one in which nobody contributes $100.
• C)This game has no Nash equilibrium in pure strategies, but has a Nash equilibrium in mixed strategies.
• D)This game has a Nash equilibrium in which 5 people contribute $100 and for public entertainment and 5 people contribute nothing.
• E)This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.

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Definitions:

Midpoint Formula

A more precise way of calculating percentages using the value halfway between P1 and P2 for the base in calculating the percentage change in price and the value halfway between Q1 and Q2 as the base for calculating the percentage change in quantity demanded.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, indicating how sensitive consumers are to price changes.

Hamburger

A popular fast food item consisting of a cooked patty of ground meat, typically beef, placed inside a sliced bun often accompanied with various condiments and toppings.

Slope

The measure of the steepness or inclination of a line or surface, typically expressed as a ratio.