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1. Three people, A, B, and C are deciding whether to put effort into producing a public good or not. Each person, 2', can choose
1. Three people, A, B, and C are deciding whether to put effort into producing a public good or not. Each person, 2', can choose no effort (Si = 0) or eort (Si = 1]. The total public good produced is G = SA + 85 + 80. The cost of doing no effort is 0 and the cost of doing effort is 2. The payoff to a player is the value of the total public good. 0, minus their personal cost. (3) Given choices by B and C\" write down A's utility from choosing no effort. Given choices by B and C1 write down A's utility from choosing effort. Comparing these two utilities. write down A's best response(s). Notice that B and C face identical problems to A. What is the unique Nash equilibrium of the game? Is this equilibrium Pareto optimal? If not, which outcome(s) are Pareto optimal? In four sentences or less: identify which collective action problem this exercise is about and explain your answer. Suppose you can tax individuals who choose no effort. For which values of a tax 7' > 0 is there a unique Nash equilibrium that is a Pareto improvement over the equilibrium of the original game without tax
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