A Small Community Has 40 People, Each of Whom Has

question 19

Multiple Choice

A small community has 40 people, each of whom has a wealth of $16,000.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 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)This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.
• 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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