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Question: complete the following table which shows the combined benefits of...

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Complete the following table, which shows the combined benefits of Amy and Deborah as previously described. Amy and Deborah are considering contributing towards the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a moblle phone. Since a water fountain is a public good, both Amy and Deborah will benefit from any contributions made by the other person. Complete the right-hand column of the following table which shows the individual benefits of Amy Hint: You are not required to consider the benefit of Deborah Contributes Doesnt contribute Specifically, every dollar that either one of them contributes will bring each of them $0.70 of benefit. For example, if both Amy and Deborah choose to contribute, then a total of $600 would be contributed to the water fountain. So, Amy and Deborah would each receive $420 of benefit from the water fountain, and their combined benefit would be $840. This is shown in the upper left cell of the first table. Contributes Doesnt contribute $720 Contribute Doesnt contribute Of the four cells of the table, which gives the greatest combined benefits to Amy and Deborah? Contribute $420 When neither Amy nor Deborah contributes to the water fountain Since a mobile phone is a private good, if Amy chooses to spend $300 on a mobile phone, Amy would get $300 of benefit When both Amy and Deborah contribute to the water from the mobile phone and Deborah wouldnt recelve any benefit from Amys choice. If Amy still spends $300 on a mobile phone and Deborah chooses to contribute $300 to the water fountain, Amy would still receive the $210 of benefit from Deborahs generosity. In other words, if Amy decides to Now, consider the incentive facing Amy individually. keep the $300 for a mobile phone and Deborah decides to contribute the $300 to the public project, then Amy would receive a total benefit of $300+$210 $510$300+$210-$510 Deborah would receive a total benefit of $210, and their combined benefit would be $720. This is shown in the lower left previously, if both Amy and Deborah contribute to a cell of the first table. Doesnt contribute $510, If Deborah decides to contribute to the water fountain, Amy would maximise her benefit by choosing not to contribute/to contribute to the water fountain. On the other hand, if Deborah decides not to contribute to the water fountain, Amy would maximise her benefit by choosing not to contribute/to contribute to the When Amy contributes to the water fountain and Deborah doesnt, or vice versa The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Amy. As shown These results illustrate A. why markets are efficient B. the Tragedy of the Commons C. the free-rider problem D. the creation of a positive externality public good, Amy receives a benefit of $420. On the other hand, if Deborah contributes to the water fountain and Amy does not, Amy receives a benefit of 0Now, consider the incentive facing Amy individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Amy. As shown previously, if both Amy and Deborah contribute to a public goud, Amy receives a benefit of $420. On the other hand, if Deborah contributes to the water fountain and Amy does not, Amy receives a benefit of $510. Amy and Deborah are considering contributing towards the creation of a water fountain. Fach can choose whether to contribute $300 to the water fountain or to keep that $300 for a mobile phone. Since a water fountain is a public good, both Amy and Deborah will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.70 of benefit. For example, if both Amy and Deborah choose to contribute, then a total of $600 would be contributed to the water fountain. So, Amy and Deborah would each receive $420 of benefit from the water fountain, and their combined benefit would be Complae the right-hand coumo ofhoinab, whic shos the individual beoeits of Amy Hint: You are net required to e sider the bent of Deborah 840. This is shown in the upper left cell of the first table. Since a mobile phone is a private good, if Amy chooses to spend $300 on a mobile phone, Amy would get $300 of benefit from the mohile phone and Deborah wouldnt receive any benefit from Amys choice. If Amy still spends $300 on a mobile phone and Deborah chooses to contribute $300 to the water fountain, Amy would still receive the $210 of benefit from Dehorahs generosity In other words, if Amy decides to keep the $300 for a mobile phone and Deborah decides to contribute the $300 to the public project, then Amy would receive a total benefit of $300+$210 $510$300+$210-$510, Deborah would receive a total benefit of $210, and their comhined benefit would be $720. This is shown in the lower left cell of the first table. Arny 10 tOstorah deidis to contribuba to the matser fountain, Asy moud mai her banit by choosing the other haed. HDeborsh deddles nat to contrbute to the water fountain, Amy woald maxinse her beneft by thoosiro the watur fountain. resuts ilustrabe Complete the following table, which shows the combined bengits af Amy and Deborah as previously describad. Contributes Dcesnt contribute Hint: You are ct required toconsider the bereft of Debora 040 Amy Doesnt contribute $720 Any Of the four cells of the table, which pives the greatest combined benefits to Amy and Deborah? wiy narksts ane etf c: Ir Deterah deddethe Tapedy of the c the other hand, i the ๒atar fountain. d macimise har berefi by choasing fauntain, Ay wuld mamise herbenefi by choasirg 0 when neither Amy nor Deborah contributes to the water fountain the tree-nicer prablem When both Amy and Deborah contribute to the water fountain the creaton of a posiive temait when Amy contributes to the water fountain and Deborah doesnt, or vice versa These reults iustrate

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