A Small Community Has 40 People, Each of Whom Has

question 25

Multiple Choice

A small community has 40 people, each of whom has a wealth of $3,000.Each individual must choose whether to contribute $400 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)This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.
• B)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.
• C)If 40b > 1, there is a dominant strategy equilibrium in which everybody contributes.
• D)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.
• E)In order for there to be a dominant strategy equilibrium in which all contribute, it must be that b > 40.

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Definitions:

Market-To-Book Ratio

A ratio used to compare a company's market value to its book value, indicating investors' expectations of the company's future growth prospects.

Earnings Per Share

A company's net profit divided by the number of its outstanding shares, indicating the profitability of a company on a per-share basis.

Times-Interest-Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations based on its current earnings.

Net Income

The total earnings of a company after all expenses and taxes have been deducted from total revenue.