A Small Community Has 40 People, Each of Whom Has

question 9

Multiple Choice

A small community has 40 people, each of whom has a wealth of $5,000.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 b times the total amount of money contributed by individuals in the community.

• A)If 40b > 1, everybody is better off if all contribute to the public entertainment fund than if nobody contributes, but if 40b < 1, everybody is better off if nobody contributes than if all contribute.
• B)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.
• C)If 40b > 1, there is a dominant strategy equilibrium in which everybody contributes.
• D)This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.
• E)In order for there to be a dominant strategy equilibrium in which all contribute, it must be that b > 40.

Understand the concept of budgeting in different business scenarios.

Calculate activity variances and identify them as favorable or unfavorable.

Prepare flexible budgets based on actual activity levels.

Analyze the financial performance of a company through its activity variances.

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Definitions:

Punishment

A consequence or penalty imposed for wrongdoing or breach of rules, intended to modify behavior through negative reinforcement.

Negative Reinforcement

A psychological principle involving the removal of an unpleasant stimulus to increase the likelihood of a desired behavior occurring again.

Law of Contingent Reinforcement

A principle stating that the effectiveness of reinforcement depends on its delivery contingent upon the occurrence of a specific behavior.

Organizational Behavior Modification

Organizational behavior modification is the use of extrinsic rewards to systematically reinforce desirable work behavior and discourage undesirable behavior.