10:55 All iCloud December 2, 2019 at 10:55 AM A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10% interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat. Number of goats Income per goat ($vear Price per 2-year old goat (S) on the commons 80 30 1 2 75 25 3 70 20 65 15 5 55 5 What will be the total village income if each villager decides how to invest based on his or her individual self-interest?
10:55 All iCloud December 2, 2019 at 10:55 AM A village has five residents, each of whom has an accumulated savings of $50. Each villager can use the money to buy a government bond that pays 10% interest per year or to buy a year-old goat, send it onto the commons to graze, and sell it after one year. The price of the goat that the villager will get at the end of the year depends on the amount of weight it gains while grazing on the commons, which in turn depends on the number of goats sent onto the commons, as shown in table below. Assume that if a villager is indifferent between buying a bond and buying a goat, the villager will buy a goat. Number of goats Income per goat ($vear Price per 2-year old goat (S) on the commons 80 30 1 2 75 25 3 70 20 65 15 5 55 5 What will be the total village income if each villager decides how to invest based on his or her individual self-interest?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter18: Savings,investment And The Financial System
Section: Chapter Questions
Problem 7PA
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Question
![10:55
All iCloud
December 2, 2019 at 10:55 AM
A village has five residents, each of whom has
an accumulated savings of $50. Each villager
can use the money to buy a government bond
that pays 10% interest per year or to buy a
year-old goat, send it onto the commons to
graze, and sell it after one year. The price of
the goat that the villager will get at the end of
the year depends on the amount of weight it
gains while grazing on the commons, which in
turn depends on the number of goats sent
onto the commons, as shown in table below.
Assume that if a villager is indifferent between
buying a bond and buying a goat, the villager
will buy a goat.
Number of goats
Income per goat
($vear
Price per 2-year
old goat (S)
on the commons
80
30
1
2
75
25
3
70
20
65
15
5
55
5
What will be the total village income if each
villager decides how to invest based on his or
her individual self-interest?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbb64f15c-b5ae-449b-a8d3-254fc71d76b6%2Ff5f9d3b0-dc80-450b-872b-529221edc19e%2Fsn9jl3.png&w=3840&q=75)
Transcribed Image Text:10:55
All iCloud
December 2, 2019 at 10:55 AM
A village has five residents, each of whom has
an accumulated savings of $50. Each villager
can use the money to buy a government bond
that pays 10% interest per year or to buy a
year-old goat, send it onto the commons to
graze, and sell it after one year. The price of
the goat that the villager will get at the end of
the year depends on the amount of weight it
gains while grazing on the commons, which in
turn depends on the number of goats sent
onto the commons, as shown in table below.
Assume that if a villager is indifferent between
buying a bond and buying a goat, the villager
will buy a goat.
Number of goats
Income per goat
($vear
Price per 2-year
old goat (S)
on the commons
80
30
1
2
75
25
3
70
20
65
15
5
55
5
What will be the total village income if each
villager decides how to invest based on his or
her individual self-interest?
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