3. Voluntary contributions toward a public good Paolo and Van are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a pool table. Since a water fountain is a public good, both Paolo and Van will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.70 of benefit. For example, if both Paolo and Van choose to contribute, then a total of $600 would be contributed to the water fountain. So, Paolo and Van would each receive $420 of benefit from the water fountain, and their combined benefit would be $840. This is shown in the upper left cell of the first table. Since a pool table is a private good, if Paolo chooses to spend $300 on a pool table, Paolo would get $300 of benefit from the pool table and Van wouldn't receive any benefit from Paolo's choice. If Paolo still spends $300 on a pool table and Van chooses to contribute $300 to the water fountain, Paolo would still receive the $210 of benefit from Van's generosity. In other words, if Paolo decides to keep the $300 for a pool table and Van decides to contribute the $300 to the public project, then Paolo would receive a total benefit of $300 + $210 = $510, Van would receive a total benefit of $210, and their combined benefit would be $720. This is shown in the lower left cell of the first table. Complete the following table, which shows the combined benefits of Paolo and Van as previously described. Van Contributes Doesn't contribute Contributes $840 Paolo Doesn't contribute $720 Of the four cells of the table, which gives the greatest combined benefits to Paolo and Van? O When Paolo contributes to the water fountain and Van doesn't, or vice versa When neither Paolo nor Van contributes to the water fountain When both Paolo and Van contribute to the water fountain Now, consider the incentive facing Paolo individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Paolo. As shown previously, if both Paolo and Van contribute to a public good, Paolo receives a benefit of $420. On the other hand, if Van contributes to the water fountain and Paolo does not, Paolo receives a benefit of $510. Complete the right-hand column of the following table, which shows the individual benefits of Paolo. Hint: You are not required to consider the benefit of Van.Van Contribute Doesn't contribute Contribute $420, -- Paolo Doesn't contribute $510, -- If Van decides to contribute to the water fountain, Paolo would maximize his benefit by choosing to the water fountain. On the other hand, if Van decides not to contribute to the water fountain, Paolo would maximize his benefit by choosing to the water fountain. These results illustrate