3. Voluntary contributions toward a public good Ginny and Lucia are considering contributing toward the creation of a botanical garden. Each can choose whether to contribute $400 to the botanical garden or to keep that $400 for a cell phone. Since a botanical garden is a public good, both Ginny and Lucia 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 Ginny and Lucia choose to contribute, then a total of $800 would be contributed to the botanical garden. So, Ginny and Lucia would each receive $640 of benefit from the botanical garden, 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 Ginny chooses to spend $400 on a cell phone, Ginny would get $400 of benefit from the cell phone and Lucia wouldn't receive any benefit from Ginny's choice. If Ginny still spends $400 on a cell phone and Lucia chooses to contribute $400 to the botanical garden, Ginny would still receive the $320 of benefit from Lucia's generosity. In other words, if Ginny decides to keep the $400 for a cell phone and Lucia decides to contribute the $400 to the public project, then Ginny would receive a total benefit of $400+ $320 = $720, Lucia 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 Ginny and Lucia as previously described. Lucia Contributes Doesn't contribute Contributes $1,280 $ Ginny Doesn't contribute $1,040 $ Of the four cells of the table, which gives the greatest combined benefits to Ginny and Lucia? When neither Ginny nor Lucia contributes to the botanical garden When both Ginny and Lucia contribute to the botanical garden When Ginny contributes to the botanical garden and Lucia doesn't, or vice versa Now, consider the incentive facing Ginny individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Ginny. As shown previously, if both Ginny and Lucia contribute to a public good, Ginny receives a benefit of $640. On the other hand, if Lucia contributes to the botanical garden and Ginny does not, Ginny receives a benefit of $720. Complete the right-hand column of the following table, which shows the individual benefits of Ginny. Hint: You are not required to consider the benefit of Lucia. Lucia Contribute Contribute Ginny Doesn't contribute $640, -- $720, -- Doesn't contribute $ If Lucia decides to contribute to the botanical garden, Ginny would maximize her benefit by choosing On the other hand, if Lucia decides not to contribute to the botanical garden, Ginny would maximize her benefit by choosing to the botanical garden. to the botanical garden. These results illustrate Grade It Now Save & Continue Continue without saving