Please solve the second image.First option is "to contribute" or "to not contribute"Second option is "to contribute" or "to not contribute"Third option is "the creation of a positive externality" or "why markets are efficient" or "the free-rider problem" or "the Tragedy of the Commons". Now, consider the incentive facing Brian individually. The following table looks similar to the previous one, but this time, it is partially completed withthe individual benefit data for Brian. As shown previously, if both Brian and Edison contribute to a public good, Brian receives a benefit of $640. Onthe other hand, if Edison contributes to the public park and Brian does not, Brian receives a benefit of $720.Complete the right-hand column of the following table, which shows the individual benefits of Brian.Hint: You are not required to consider the benefit of Edison.BrianContributeDoesn't contributeContribute$640,--$720, --These results illustrateEdisonDoesn't contribute$$If Edison decides to contribute to the public park, Brian would maximize his benefit by choosingother hand, if Edison decides not to contribute to the public park, Brian would maximize his benefit by choosingpark.to the public park. On theto the public Brian and Edison are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park orto keep that $400 for a cell phone.Since a public park is a public good, both Brian and Edison will benefit from any contributions made by the other person. Specifically, every dollar thateither one of them contributes will bring each of them $0.80 of benefit. For example, if both Brian and Edison choose to contribute, then a total of$800 would be contributed to the public park. So, Brian and Edison would each receive $640 of benefit from the public park, and their combinedbenefit would be $1,280. This is shown in the upper left cell of the first table.Since a cell phone is a private good, if Brian chooses to spend $400 on a cell phone, Brian would get $400 of benefit from the cell phone and Edisonwouldn't receive any benefit from Brian's choice. If Brian still spends $400 on a cell phone and Edison chooses to contribute $400 to the public park,Brian would still receive the $320 of benefit from Edison's generosity. In other words, if Brian decides to keep the $400 for a cell phone and Edisondecides to contribute the $400 to the public project, then Brian would receive a total benefit of $400 + $320 = $720, Edison would receive a totalbenefit of $320, and their combined benefit would be $1,040. This is shown in the lower left cell of the first table.Complete the following table, which shows the combined benefits of Brian and Edison as previously described.BrianContributesDoesn't contributeEdisonContributes Doesn't contribute$1,280$1,040$800$1,040Of the four cells of the table, which gives the greatest combined benefits to Brian and Edison?When both Brian and Edison contribute to the public parkWhen neither Brian nor Edison contributes to the public parkWhen Brian contributes to the public park and Edison doesn't, or vice versa

There are two people : Brian & Edison They face two choices : Contribute for park & Do not…

Now, consider the incentive facing Brian individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Brian. As shown previously, if both Brian and Edison contribute to a public good, Brian receives a benefit of $640. On the other hand, if Edison contributes to the public park and Brian does not, Brian receives a benefit of $720.

Now, consider the incentive facing Brian individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Brian. As shown previously, if both Brian and Edison contribute to a public good, Brian receives a benefit of $640. On the other hand, if Edison contributes to the public park and Brian does not, Brian receives a benefit of $720.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter3: Interdependence And The Gains From Trade

Section: Chapter Questions

Problem 3CQQ

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