3. Voluntary contributions toward a public good Lucia and Sharon are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit. Since a public park is a public good, both Lucia and Sharon 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 Lucia and Sharon choose to contribute, then a total of $800 would be contributed to the public park. So, Lucia and Sharon would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a new suit is a private good, if Lucia chooses to spend $400 on a new suit, Lucia would get $400 of benefit from the new suit and Sharon wouldn't receive any benefit from Lucia's choice. If Lucia still spends $400 on a new suit and Sharon chooses to contribute $400 to the public park, Lucia would still receive the $320 of benefit from Sharon's generosity. In other words, if Lucia decides to keep the $400 for a new suit and Sharon decides to contribute the $400 to the public project, then Lucia would receive a total benefit of $400 + $320 = $720, Sharon 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 Lucia and Sharon as previously described. Sharon Contributes Doesn't contribute Contributes $1,280 $ Lucia Doesn't contribute $1,040 $Of the four cells of the table, which gives the greatest combined benefits to Lucia and Sharon? O When neither Lucia nor Sharon contributes to the public park O When both Lucia and Sharon contribute to the public park O When Lucia contributes to the public park and Sharon doesn't, or vice versaNow, consider the incentive facing Lucia individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Lucia. As shown previously, if both Lucia and Sharon contribute to a public good, Lucia receives a benefit of $640. On the other hand, if Sharon contributes to the public park and Lucia does not, Lucia receives a benefit of $720. Complete the right-hand column of the following table, which shows the individual benefits of Lucia. Hint: You are not required to consider the benefit of Sharon. Sharon Contribute Doesn't contribute Contribute $640, -- $ Lucia Doesn't contribute $720, -- $ If Sharon decides to contribute to the public park, Lucia would maximize her benefit by choosing to the public park. On the other hand, if Sharon decides not to contribute to the public park, Lucia would maximize her benefit by choosing to the public park. These results illustrateIf Sharon decides to contribute to the public park, Lucia would maximize her benefit by choosing V to the public park. On the other hand, if Sharon decides not to contribute to the public park, Lucia would maximize her ben V to the public to contribute park. not to contribute These results illustrate V . If Sharon decides to contribute to the public park, Lucia would maximize her benefit by choosing V to the public park. On the other hand, if Sharon decides not to contribute to the public park, Lucia would maximize her benefit by choosing V to the public to contribute park. These results illustrate V . not to contribute Lucia Doesn't contri the Tragedy of the Commons If Sharon decides to co why markets are efficient maximize her benefit by choosing to the public park. On the other hand, if Sharon d the free-rider problem ark, Lucia would maximize her benefit by choosing to the public park. the creation of a positive externality These results illustrate