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Brian and Edison are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to 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 that either 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 combined benefit 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 Edison wouldn'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 Edison decides to contribute the $400 to the public project, then Brian would receive a total benefit of $400 + $320 = $720, Edison 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 Brian and Edison as previously described. Brian Contributes Edison Contributes Doesn't contribute $ $ $1,280 Doesn't contribute $1,040 Of the four cells of the table, which gives the greatest combined benefits to Brian and Edison? the public park or When both Brian and Edison contribute to the public park When neither Brian nor Edison contributes to the public park O When Brian contributes to the public park and Edison doesn't, or vice versa

Brian and Edison are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to 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 that either 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 combined benefit 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 Edison wouldn'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 Edison decides to contribute the $400 to the public project, then Brian would receive a total benefit of $400 + $320 = $720, Edison 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 Brian and Edison as previously described. Brian Contributes Edison Contributes Doesn't contribute $ $ $1,280 Doesn't contribute $1,040 Of the four cells of the table, which gives the greatest combined benefits to Brian and Edison? the public park or When both Brian and Edison contribute to the public park When neither Brian nor Edison contributes to the public park O When Brian contributes to the public park and Edison doesn't, or vice versa

Principles of Microeconomics
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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Brian and Edison 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 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 that either 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 combined benefit 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 Edison wouldn'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 Edison decides to contribute the $400 to the public project, then Brian would receive a total benefit of $400 + $320 = $720, Edison 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 Brian and Edison as previously described. Brian Contributes Doesn't contribute Edison Contributes Doesn't contribute $ $1,280 $1,040 $ Of 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 park O When neither Brian nor Edison contributes to the public park When Brian contributes to the public park and Edison doesn't, or vice versa
Transcribed Image Text:Brian and Edison 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 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 that either 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 combined benefit 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 Edison wouldn'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 Edison decides to contribute the $400 to the public project, then Brian would receive a total benefit of $400 + $320 = $720, Edison 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 Brian and Edison as previously described. Brian Contributes Doesn't contribute Edison Contributes Doesn't contribute $ $1,280 $1,040 $ Of 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 park O When neither Brian nor Edison contributes to the public park When Brian contributes to the public park and Edison doesn't, or vice versa
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