A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10 percent interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in the table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat.Number of goatson the commonsPrice per 2-yearold goat ($)Income pergoat ($/year)180302752537020465155555 When the each villager decides how to invest based on his or her narrow
self-interest, total village income will be ________ when the village collectively decides how to invest.
A. either higher than or lower than depending on the price of the goats
B. lower than
C. higher than
D. the same as
Answer: B
You might also like to view...
Which of the following observations is true of the principle of comparative advantage?
A. It arises from the absolute cost advantage. B. It helps determine most efficient patterns of production. C. It was advanced by Adam Smith. D. It means producing a good using smaller quantities of resources than others.
A short-run equilibrium occurs
A. at the intersection of the long-run aggregate supply curve and the aggregate demand curve. B. at the intersection of the short-run aggregate supply curve and the aggregate demand curve. C. at the real GDP associated with full employment. D. at the intersection of the short-run aggregate supply curve and the long-run aggregate supply curve.
In the above figure, the difference between the competitive industry price and that of the monopolist is
A. CE. B. 0B. C. 0A. D. AB.
A monetary stimulus is designed to shift the
A. AD curve to the left. B. AS curve to the right. C. AD curve to the right. D. AS curve to the left.