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9. Best responses for individual contributions to a public good Antonio and Caroline each rent one unit of a two-unit apartment building. The building has two separate furnaces located between the two apartments. The renters each control and pay for the heat their furnaces generate and would choose to increase the temperature of their apartments by 30 degrees if the other never turned on their furnace, given that the marginal private benefit (MB) of the 30th degree is equal to the marginal cost (MC) of 1 degree of heat (assume that the MC of heat is constant and that the MB of heat is decreasing). However, each degree of heat paid for by one not only raises the temperature in that apartment by a degree but also raises the temperature in the other apartment by half a degree. As a result, if Caroline were to buy 40 degrees of heat, then Antonio would need to purchase only| degrees of heat before his personal marginal benefit of the final degree was equal to the marginal cost. Use the blue line (circle symbols) to plot Antonio's best-response function (BRF) on the following graph, with the total amount of heat he will buy on the vertical axis as a function of the total amount Caroline buys (horizontal axis). (Hint: Antonio's response to Caroline's purchase noted previously represents one point on the line, and the response when Caroline purchases 0 degrees of heat will be the vertical intercept. ) Then, use the orange line (square symbols) to plot Caroline's best-response function, with the total amount she will buy (horizontal axis) as a function of the total amount Antonio buys (vertical axis). Finally, place the black point (X symbol) on the graph to indicate the equilibrium amount of heat each person will purchase, given the other's equilibrium choice. Dashed drop lines will automatically extend to both axes. 100 Antonio " BR Careline . BR HEAT BOUGHT BY ANTONIO Equilibrium 30 40 50 60 100 HEAT BOUGHT BY CAROLINE Suppose the government is worried about the low temperatures and wants to increase heat consumption. True or False: The current equilibrium is efficient; therefore, any government intervention would result in an inefficient level of heat. O False O True