Question
PLZ FILL IN THE BLANKS USING INFORMATION PROVIDED THANKS Consider an altruistic individual whose utility function is given by U=f(I self, I charity ).Their marginal
PLZ FILL IN THE BLANKS USING INFORMATION PROVIDED THANKS
Consider an altruistic individual whose utility function is given by U=f(Iself,Icharity).Their marginal utility from donating to charity (i.e. donating to those in need) is given by MPU=312-Icharity and their marginal disutility from donating to charity is given by MDU=6Icharity.This individual's donations also result in marginal external utility to third parties (others who benefit from knowing that donations by the altruisitic individual are being made to those in need), given by MEU=0.5Icharity.Using a graph with marginal utils on the vertical axis and Icharity on the horizontal axis, answer the following questions.
32. This individual will voluntarily donate $ ______________to charity.
33. The socially efficient amount of donations is $ ________________.
34. To encourage this individual to voluntarily donate the socially efficient amount to charity government would need to offer this individual a tax credit in the amount of $_____________.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started