3. [25 marks] (Lindahl pricing). Suppose there are two neighbours who value gardening services. Where G is the number of hours a gardener works each month to make their properties look better (a. public good for them). Let pg : 8, so that the full price of an hour of services is $8. Person 11s valuation is 1118] = 40 20. Person 21s valuation is 111782 : 10 0/2. Let sl be the share of the price that person 1 must pa}r (where I] g 51 g 1)7 so that $2 : 1 5]. If both people are honest3 they will report that they want a. level of 0 consistent with 1M Bi 2 8.9., i = 1, 2. a. [10 marks] Show that a Lindahl equilibrium exists where person 1 pays for most of C. W hat exactly is person 1's share? What is the level of C in equilibrium? Is it efcient? b. [10 marks] Suppose that person 2 tells the truth about his valuation, but person 1 pretends that her valuation is actually 1MB] 2 1() 0/2 [the same as person 2). Calculate the new Lindahl equilibrium. Show that Person 1 actually benets from lying in this way. (Hint: compare TB TC for G in part (a) and part (b).) c. [5 marks] Assuming that person 2 tells the truth= could person 1 benet from pretending she has no value for gardening at all? (ie. 4-1431 2 0). Explain wh}r or Why not