1. Find the social optimal income share of driveway services, 5. (5pts) 2. Find the private optimal income share of driveway services, 8*. (5 pts) 3. Compare 6* and 6. Explain intuitively why they are different. (5 pts) 4. Now suppose there is some extent of altruism. I.e. ;(c;, D) = In(c;) +yln(D) + 5In(D). Find the private optimal income share with altruism 64. Compare 54 and 6. What happens if y = y. (10 pts) 5. Now, consider the case with warm glow where each person cares about his contribution to the driveway rather than his consumption of driveway. Specifically, wi(c, di) = In(ci) + yln(di). Find the private optimal income share with warm glow, o . Compare & and 8. Explain intuitively. (10 pts) 6. Now suppose I1 > 12. Specifically, I1 = MI2 but 71 = 12 = 7. Find the social and private optimal level of income share: 61 and of. What happens if M -> co. Explain intuitively. (10 pts) 7. Now suppose I1 = 12 but 71 = M 2. Find the social and private optimal level of income share: 61 and o*. What happens if M -> co. Explain intuitively. (10 pts)

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