Connect Problem 11-12 (algo) A village has six residents, each of whom has accumulated savings of $110. Each villager can use this money either to buy a government bond that pays 20 percent interest per year or to buy a 1-year-old goat, set it onto the commons to graze, and sell it after a year. The price the villager gets for a 2-year-old goat depends on the amount of weight it gains while grazing on the commons, which in turn, depends on the number of goats sent onto the commons, as shown in the following table: Price of 2- Number of goats on the commons year-old goat ($) 125 117 3. 114 4. 111 108 105 a. If each villager decides individually how to invest, then how many goats will be sent onto the commons and how many villagers will buy a bond? Instructions: Enter your responses as whole numbers. 4 goat(s) will be sent onto the commons and 2 O villager(s) will buy government bonds What will be the resulting village income? $ 116 O b. What is the socially optimal number of goats for this village to send onto the commons? yuuyu J I I LU II u What will be the resulting village income? 2$ 116 O b. What is the socially optimal number of goats for this village to send onto the commons? 1 O goat(s) What would village income be if the socially optimal number of goats were sent onto the commons? 110 O c. The village committee votes to auction the right to graze goats on the commons to the highest bidder. Assuming the villagers can both borrow and lend at 20 percent annual interest, how much will the right to graze goats on the commons be worth at auction? 2$ I need help finding the answers to all of the spaces without a green check mark.
Connect Problem 11-12 (algo) A village has six residents, each of whom has accumulated savings of $110. Each villager can use this money either to buy a government bond that pays 20 percent interest per year or to buy a 1-year-old goat, set it onto the commons to graze, and sell it after a year. The price the villager gets for a 2-year-old goat depends on the amount of weight it gains while grazing on the commons, which in turn, depends on the number of goats sent onto the commons, as shown in the following table: Price of 2- Number of goats on the commons year-old goat ($) 125 117 3. 114 4. 111 108 105 a. If each villager decides individually how to invest, then how many goats will be sent onto the commons and how many villagers will buy a bond? Instructions: Enter your responses as whole numbers. 4 goat(s) will be sent onto the commons and 2 O villager(s) will buy government bonds What will be the resulting village income? $ 116 O b. What is the socially optimal number of goats for this village to send onto the commons? yuuyu J I I LU II u What will be the resulting village income? 2$ 116 O b. What is the socially optimal number of goats for this village to send onto the commons? 1 O goat(s) What would village income be if the socially optimal number of goats were sent onto the commons? 110 O c. The village committee votes to auction the right to graze goats on the commons to the highest bidder. Assuming the villagers can both borrow and lend at 20 percent annual interest, how much will the right to graze goats on the commons be worth at auction? 2$ I need help finding the answers to all of the spaces without a green check mark.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter10: Externalities
Section: Chapter Questions
Problem 5PA
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Transcribed Image Text:Connect Problem 11-12 (algo)
A village has six residents, each of whom has accumulated savings of $110. Each villager can use this money either to buy a
government bond that pays 20 percent interest per year or to buy a 1-year-old goat, set it onto the commons to graze, and sell it after
a year. The price the villager gets for a 2-year-old goat depends on the amount of weight it gains while grazing on the commons, which
in turn, depends on the number of goats sent onto the commons, as shown in the following table:
Number of
Price of 2-
year-old
goat ($)
goats on the
commons
125
117
3.
114
111
108
6
105
a. If each villager decides individually how to invest, then how many goats will be sent onto the commons and how many villagers will
buy a bond?
Instructions: Enter your responses as whole numbers.
4 O goat(s) will be sent onto the commons and
2 O villager(s) will buy government bonds
What will be the resulting village income?
$
116 O
b. What is the socially optimal number of goats for this village to send onto the commons?
What will be the resulting village income?
$
116 *
b. What is the socially optimal number of goats for this village to send onto the commons?
1 O goat(s)
What would village income be if the socially optimal number of goats were sent onto the commons?
2$
110 *
c. The village committee votes to auction the right to graze goats on the commons to the highest bidder. Assuming the villagers can
both borrow and lend at 20 percent annual interest, how much will the right to graze goats on the commons be worth at auction?
$
I need help finding the answers to all of the
spaces without a green check mark.
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