3. Voluntary contributions toward a public good Caroline and Frances are considering contributing toward the creation of a building mural. Each can choose whether to contribute $400 to the building mural or to keep that $400 for a cell phone. Since a building mural is a public good, both Caroline and Frances will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Caroline and Frances choose to contribute, then a total of $800 would be contributed to the building mural. So, Caroline and Frances would each receive $640 of benefit from the building mural, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a cell phone is a private good, if Caroline chooses to spend $400 on a cell phone, Caroline would get $400 of benefit from the cell phone and Frances wouldn't receive any benefit from Caroline's choice. If Caroline still spends $400 on a cell phone and Frances chooses to contribute $400 to the building mural, Caroline would still receive the $320 of benefit from Frances's generosity. In other words, if Caroline decides to keep the $400 for a cell phone and Frances decides to contribute the $400 to the public project, then Caroline would receive a total benefit of $400 + $320 = $720, Frances would receive a total benefit of $320, and their combined benefit would be $1,040. This is shown in the lower left cell of the first table. Complete the following table, which shows the combined benefits of Caroline and Frances as previously described. Frances Contributes Doesn't contribute Contributes $1,280 Caroline Doesn't contribute $1,040 S Of the four cells of the table, which gives the greatest combined benefits to Caroline and Frances? O When neither Caroline nor Frances contributes to the building mural O When both Caroline and Frances contribute to the building mural When Caroline contributes to the building mural and Frances doesn't, or vice versa Now, consider the incentive facing Caroline individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Caroline. As shown previously, if both Caroline and Frances contribute to a public good, Caroline receives a benefit of $640. On the other hand, if Frances contributes to the building mural and Caroline does not, Caroline receives a benefit of $720. Complete the right-hand column of the following table, which shows the individual benefits of Caroline. Hint: You are not required to consider the benefit of Frances. Frances Contribute Doesn't contribute Contribute $640, -- Caroline Doesn't contribute $720, -- If Frances decides to contribute to the building mural, Caroline would maximize her benefit by choosing to the building mural. On the other hand, if Frances decides not to contribute to the building mural, Caroline would maximize her benefit by choosing to the building mural. These results illustrate