The manager of a team realizes that the team members often need to work at odd hours 1 She considers whether to hire a and face trouble commuting back to their residence. round-theclock cab, which can be used by any of the 3 team members as they wish. The cab provider charges a xed amount of 5000. In addition, he charges a variable amount 2000*(9'1 +92 +93), where y1, y2 and 923 are the usage levels of the 3 team members. These costs are borne by the manager. Team member is benets from the service are equal to 100003;,- 25003;? 1000*(y1 + y? + ya). The last term reects the fact that the higher the aggregate usage of the service, the lower the quality of the service (e.g., due to increased waiting times or wear and tear of the car). (a) Suppose that once the service is provided, the manager can choose each member's usage level (y1, y2 and y3) in order to maximize the aggregate net benet from the service.2 Would she be willing to provide the service? Assume that she does so only if the aggregate net benet is positive. (b) Suppose that once the service is provided, each member of the team chooses their own usage level, assuming that they cannot do anything to inuence the choices of the other team members. Would the manager be willing to provide the service? Continue to assume that she does so only if the aggregate net benet is positive. (c) Consider the scenario from the previous part but suppose that the manager asks each member to pay the variable cost of their own usage. For example, member 1 is asked to pay 2000*y1. Compare the values of yl, yg and 93 to the ones obtained in parts (a) and (b). Explain whether charging the team members leads them to \"internalize the externality\" of their usage. 1This problem is adapted from David Kreps' Microeconomics for Managers. 2The aggregate net benet is aggregate benet minus aggregate costs of providing the service