- June 25, 2021

Consider there are 100 citizens in a society. Each citizen may decide to attend university or not. Suppose the share of citizens who attend university is 0. The earnings for those who did not go to university is 2+50. The earnings for those ittend university is3+5for0<0.;and3+8for0≥0.4. All citizens decide whether or not to attend university at the same time. The financial cost of attending iniversity is C. Citizens are risk-neutra so that their utility equals earning minus any education costs. ()Suppose C=2, is there an equilibrium where no citizen attends university? Show your reasoning. (5 marks) ()Suppose=3, is there an equilibrium where 90 citizens attend university while others do not? Show your reasoning. (5 marks) (c)Suppose C=5, is there an equilibrium where all citizens attend university? Show your reasoning. (5 marks)

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