A Small Community Has 20 People, Each of Whom Has

question 1

Multiple Choice

A small community has 20 people, each of whom has a wealth of $12,000.Each individual must choose whether to contribute $300 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 20b > 1, everybody is better off if all contribute to the public entertainment fund than if nobody contributes, but if 20b < 1, everybody is better off if nobody contributes than if all contribute.
• B)If 20b > 1, there is a dominant strategy equilibrium in which everybody contributes.
• C)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.
• 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 > 20.

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Definitions:

Cash Budget

A forecast of cash inflows and outflows for a business or individual for a specific period of time.

Budgeted Income Statement

A financial statement that forecasts a company's revenue, expenses, and net income for a future period.

Budgeted Balance Sheet

A projection of a company's financial position at a future date, detailing assets, liabilities, and equity.

Production Budget

A financial plan that estimates the number of units to be produced to meet sales goals within a given period.