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A village has five residents, each of whom has accumulated savings of $200

Economics

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A village has five residents, each of whom has accumulated savings of $200. 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.

Number of goats on the commons	Price per 2-year-old goat ($)	Income per goat ($/year)
1	252	52
2	242	42
3	229	29
4	212	12
5	206	6

1. The villager will buy a year-old goat if it will command a price of at least _ as a 2-year old.

a) $240

b) $220

c) $210

d) $200

2. Without assigning the property right to an individual, how many goats will be raised on the commons?

a) 2

b) 3

c) 4

d) 5

3. If the property right is assigned to an individual, how many goats will be raised on the commons?

a) 2

b) 3

c) 4

d) 5