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Antonio and Dmitri are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit. Since a public park is a public good, both Antonio and Dmitri will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Antonio and Dmitri choose to contribute, then a total of $800 would be contributed to the public park. So, Antonio and Dmitri would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a new suit is a private good, if Antonio chooses to spend $400 on a new suit, Antonio would get $400 of benefit from the new suit and Dmitri wouldn't receive any benefit from Antonio's choice. If Antonio still spends $400 on a new suit and Dmitri chooses to contribute $400 to the public park, Antonio would still receive the $320 of benefit from Dmitri's generosity. In other words, if Antonio decides to keep the $400 for a new suit and Dmitri decides to contribute the $400 to the public project, then Antonio would receive a total benefit of $400+ $320 $720, Dmitri would receive a total benefit 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 Antonio and Dmitri as previously described. Antonio Contributes Doesn't contribute Dmitri Contributes Doesn't contribute $ $1,280 $1,040 S Of the four cells of the table, which gives the greatest combined benefits to Antonio and Dmitri? O When Antonio contributes to the public park and Dmitri doesn't, or vice versa O When both Antonio and Dmitri contribute to the public park O When neither Antonio nor Dmitri contributes to the public park

Antonio and Dmitri are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit. Since a public park is a public good, both Antonio and Dmitri will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Antonio and Dmitri choose to contribute, then a total of $800 would be contributed to the public park. So, Antonio and Dmitri would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a new suit is a private good, if Antonio chooses to spend $400 on a new suit, Antonio would get $400 of benefit from the new suit and Dmitri wouldn't receive any benefit from Antonio's choice. If Antonio still spends $400 on a new suit and Dmitri chooses to contribute $400 to the public park, Antonio would still receive the $320 of benefit from Dmitri's generosity. In other words, if Antonio decides to keep the $400 for a new suit and Dmitri decides to contribute the $400 to the public project, then Antonio would receive a total benefit of $400+ $320 $720, Dmitri would receive a total benefit 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 Antonio and Dmitri as previously described. Antonio Contributes Doesn't contribute Dmitri Contributes Doesn't contribute $ $1,280 $1,040 S Of the four cells of the table, which gives the greatest combined benefits to Antonio and Dmitri? O When Antonio contributes to the public park and Dmitri doesn't, or vice versa O When both Antonio and Dmitri contribute to the public park O When neither Antonio nor Dmitri contributes to the public park

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Antonio and Dmitri are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit. Since a public park is a public good, both Antonio and Dmitri will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Antonio and Dmitri choose to contribute, then a total of $800 would be contributed to the public park. So, Antonio and Dmitri would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a new suit is a private good, if Antonio chooses to spend $400 on a new suit, Antonio would get $400 of benefit from the new suit and Dmitri wouldn't receive any benefit from Antonio's choice. If Antonio still spends $400 on a new suit and Dmitri chooses to contribute $400 to the public park, Antonio would still receive the $320 of benefit from Dmitri's generosity. In other words, if Antonio decides to keep the $400 for a new suit and Dmitri decides to contribute the $400 to the public project, then Antonio would receive a total benefit of $400 + $320 = $720, Dmitri would receive a total benefit 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 Antonio and Dmitri as previously described. Antonio Contributes Doesn't contribute Dmitri Contributes Doesn't contribute $ $1,280 $1,040 $ of the four cells of the table, which gives the greatest combined benefits to Antonio and Dmitri? O When Antonio contributes to the public park and Dmitri doesn't, or vice versa When both Antonio and Dmitri contribute to the public park O When neither Antonio nor Dmitri contributes to the public park
Transcribed Image Text:Antonio and Dmitri are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit. Since a public park is a public good, both Antonio and Dmitri will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Antonio and Dmitri choose to contribute, then a total of $800 would be contributed to the public park. So, Antonio and Dmitri would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a new suit is a private good, if Antonio chooses to spend $400 on a new suit, Antonio would get $400 of benefit from the new suit and Dmitri wouldn't receive any benefit from Antonio's choice. If Antonio still spends $400 on a new suit and Dmitri chooses to contribute $400 to the public park, Antonio would still receive the $320 of benefit from Dmitri's generosity. In other words, if Antonio decides to keep the $400 for a new suit and Dmitri decides to contribute the $400 to the public project, then Antonio would receive a total benefit of $400 + $320 = $720, Dmitri would receive a total benefit 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 Antonio and Dmitri as previously described. Antonio Contributes Doesn't contribute Dmitri Contributes Doesn't contribute $ $1,280 $1,040 $ of the four cells of the table, which gives the greatest combined benefits to Antonio and Dmitri? O When Antonio contributes to the public park and Dmitri doesn't, or vice versa When both Antonio and Dmitri contribute to the public park O When neither Antonio nor Dmitri contributes to the public park
Now, consider the incentive facing Antonio individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Antonio. As shown previously, if both Antonio and Dmitri contribute to a public good, Antonio receives a benefit of $640. On the other hand, if Dmitri contributes to the public park and Antonio does not, Antonio receives a benefit of $720. Complete the right-hand column of the following table, which shows the individual benefits of Antonio. Hint: You are not required to consider the benefit of Dmitri. Antonio Contribute $640,-- Doesn't contribute $720,- Contribute Dmitri Doesn't contribute $ $ If Dmitri decides to contribute to the public park, Antonio would maximize his benefit by choosing other hand, if Dmitri decides not to contribute to the public park, Antonio would maximize his benefit by choosing public park. These results illustrate to the public park. On the to the
Transcribed Image Text:Now, consider the incentive facing Antonio individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Antonio. As shown previously, if both Antonio and Dmitri contribute to a public good, Antonio receives a benefit of $640. On the other hand, if Dmitri contributes to the public park and Antonio does not, Antonio receives a benefit of $720. Complete the right-hand column of the following table, which shows the individual benefits of Antonio. Hint: You are not required to consider the benefit of Dmitri. Antonio Contribute $640,-- Doesn't contribute $720,- Contribute Dmitri Doesn't contribute $ $ If Dmitri decides to contribute to the public park, Antonio would maximize his benefit by choosing other hand, if Dmitri decides not to contribute to the public park, Antonio would maximize his benefit by choosing public park. These results illustrate to the public park. On the to the
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