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QUESTION 11 10 points Save Answer Suppose that each of 102 citizens in a country needs to pay a tax of 30 every year to
QUESTION 11 10 points Save Answer Suppose that each of 102 citizens in a country needs to pay a tax of 30 every year to the government. Each citizen may decide to pay or to evade the tax. If an evader is found, the law of the country stipulates payment of a fine of amount F. However, the government's vigilance is not perfect, because it has limited resources to detect evaders. Assume that out of all the people who evade taxes, the government has the capacity to catch only one, and this person is chosen randomly. Thus, if m people have decided to evade taxes, the government has the capacity to catch only one, and this person is chosen randomly. Thus, if m people have decided to evade taxes, each has a probability 1/m of being caught. Assume that people simply calculate the expected losses from each strategy and choose the strategy with the lower expected loss (consider only pure strategy and no randomization). Which of the following statements is incorrect? O a. If the government sets F to be 3000, there is an equilibrium where no citizen evades taxes. O b. If the government sets F to be 3000, there is an equilibrium where every citizen evades taxes. C. If the government sets F to be 2500, there is an equilibrium where 50 citizens evade taxes while others do not. O d. If the government sets F to be 40, there is an equilibrium where no citizen evades taxes. O e. If the government sets F to be 2800, there is an equilibrium where every citizen evades taxes
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