If Alyssa decides to contribute to the public park, Rosa would maximize her bene
ID: 1103444 • Letter: I
Question
If Alyssa decides to contribute to the public park, Rosa would maximize her benefit by choosing selector 1
not to contribute
to contribute
to the public park. On the other hand, if Alyssa decides not to contribute to the public park, Rosa would maximize her benefit by choosing selector 2
not to contribute
to contribute
to the public park.
These results illustrate selector 1
why markets are efficient
the creation of a positive externality
the free-rider problem
the Tragedy of the Commons
.
MindTap-Cengage Learning#!&parentid;=224853848-Microsoft Edge ng cengage.com/static/nb/ui/index.html?nbid-61 3134&nbNodeld-224853847;&deploymentid;=567366729497 1628362 3863 78&elSBN-9781; 337096577#!&parentld-224854050; MINDTAP Tyler Fisher Ch 11 GRADED Homework Due on Tomorrow at 11:59 PM EST Back to Assignment Attempts: Keep the Highest: 5 3. Voluntary contributions toward a public good Rosa and Alyssa are considering contributing toward the creation of a public park. Each can choose whether to contribute $300 to the public park or to keep that $300 for a weekend getaway Since a public park is a public good, both Rosa and Alyssa 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 Rosa and Alyssa choose to contribute, then a total of $600 would be contributed to the public park. So, Rosa and Alyssa would each receive $420 of benefit from the public park, and their combined benefit would be $840. This is shown in the upper left cell of the first table. Since a weekend getaway is a private good, if Rosa chooses to spend $300 on a weekend getaway, Rosa would get $300 of benefit from the weekend getaway and Alyssa wouldn't receive any benefit from Rosa's choice. If Rosa still spends $300 on a weekend getaway and Alyssa chooses to contribute $300 to the public park, Rosa would stl receive the $210 of benefit from Alyssa's generosity. In other words, if Rosa decides to keep the $300 for a weekend getaway and Alyssa decides to contribute the $300 to the public project, then Rosa would receive a total benefit of $300+$210= $510. Alyssa would receive a total benefit of $210, and their combined benefit would be $720. This is shown in the lower left cell of the first table. Complete the following table, which shows the combined benefits of Rosa and Alyssa as previously described. O Type here to search ^ f d1) ENG 11/4/2017Explanation / Answer
1. When Alyssa doesn't contribute and Rosa Contribute:
Alyssa get benefit of 300 which he spend on weekend gateway and $ 210 i.e. 0.70 of $ 300 which Rosa spend on public good. So, total benefit received by Alyssa = 300 + 210 = $ 510
Rosa gets benefit of $ 210 only.
Total benefit = $ 510 + $ 210 = $ 720
2. When Alyssa and Rosa do not contribute:
Both will get benefit of $ 300 which they spend on weekend gateway. So, total benefit = $ 600
3. When both Rosa and Alyssa contribute to the public park.
4. Rosa benefit when Alyssa doesn't contribute: 0.70 of Rosa investment X 300 = $ 210
5. Rosa benefit when Alyssa and she don't contribute: $ 300
6. Not to contribute
7. Not to contribute
8. The creation of the positive externality