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please bold answers and answer all! thank you I will include the dropdowns below, they will be underlined! benefit by choosing not to contribute/to contribute
please bold answers and answer all! thank you
I will include the dropdowns below, they will be underlined!
"benefit by choosing not to contribute/to contribute"
"these results illustrates the creation of a positive externality, the tradegy of the commons, the free rider problem, why markets are efficient"
3. Voluntary contributions toward a public good Kyoko and Rina are considering contributing toward the creation of a water fountain. Each can choose whether to contribute 5400 to the water fountain or to keep that $400 for a cell phone. Since a water fountain is a public good, both Kyoko and Rina will benefik 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 Kyoko and Rina choose to contribute, then a total of $800 would be contributed to the water fountain. 50 , kyoko and Rina would each receive $640 of benefic from the water fountain, and their combined beneft would be $1,260. This is shown in the upper left cell of the first table. Since a cell phone is a private good, if kyoko chooses to spend $400 on a celf phone, Kyoko would get 5400 of benefit from the cell phone and Rina wouldn't recelve ary benent trom Kyoko's choice. If kyoko still spends $400 on a cell phone and Rina chooses to contribute $400 to the water fountain, Kyoko would still recelve the $320 of benefit from Aina's generosity, In other words, if Kyoko decides to keep the 5400 for a cell phone and Rina decides to contribute the $490 to the public project, then Kyoko would recelve a total benefit of $400+5320 = $720, Rina would receive a total beneft of 3320 , and theif combined beneft would be $1,040, This is shown in the lawer lef cell of the first table. Complete the following table, which shows the combined benefits of Kyoko and Rina as previousiy dascribed. of the four cells of the table, which gives the greatest combined benefits to Kyoko and kina? When Kyoko contributes to the water fountain and kina doesn', or vice versa When both kyoko and Rine contribute to the water fountain When nelther Kyoko nor Rina contributes to the water fountain Now, consider the incentive facing Kyoko individually. The following table looks simiar to the previous one, but this time, it is partialy completed with the indlvidual benefit dota for Kyoko. As shown previously, if both Kyoko and kina contribute to a public good, kyoko receives a benefit of \$640, On the other hand, if kina contributes to the water fountain and kyoko does not, kyoko receives a benert of \$720. Complete the right-hand column of the following table, which shows the individual benefits of Kyoko. Hint: You are not required to consider the benefit of Rina. If tuna decides to contribute to the water fountain, kyowo would masimire her beneft by choosing to the water fountain. On the other hand, if Rina decides not to contribute to the water fountain, kyoko would maximire her benefr by cheosing to the water fountain. These results illustrate Step by Step Solution
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