Hubert and Manuel are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a cell phone.Since a water fountain is a public good, both Hubert and Manuel 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 Hubert and Manuel choose to contribute, then a total of $600 would be contributed to the water fountain. So, Hubert and Manuel 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.Since a cell phone is a private good, if Hubert chooses to spend $300 on a cell phone, Hubert would get $300 of benefit from the cell phone and Manuel wouldn't receive any benefit from Hubert's choice. If Hubert still spends $300 on a cell phone and Manuel chooses to contribute $300 to the water fountain, Hubert would still receive the $210 of benefit from Manuel's generosity. In other words, if Hubert decides to keep the $300 for a cell phone and Manuel decides to contribute the $300 to the public project, then Hubert would receive a total benefit of $300+$210=$510$300+$210=$510, Manuel 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 Hubert and Manuel as previously described. ManuelContributesDoesn't contributeHubertContributes$840 Doesn't contribute$720 Of the four cells of the table, which gives the greatest combined benefits to Hubert and Manuel?When neither Hubert nor Manuel contributes to the water fountain When Hubert contributes to the water fountain and Manuel doesn't, or vice versa When both Hubert and Manuel contribute to the water fountain Now, consider the incentive facing Hubert individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Hubert. As shown previously, if both Hubert and Manuel contribute to a public good, Hubert receives a benefit of $420. On the other hand, if Manuel contributes to the water fountain and Hubert does not, Hubert receives a benefit of $510.Complete the right-hand column of the following table, which shows the individual benefits of Hubert.Hint: You are not required to consider the benefit of Manuel. ManuelContributeDoesn't contributeHubertContribute$420, -- , --Doesn't contribute$510, -- , -- If Manuel decides to contribute to the water fountain, Hubert would maximize his benefit by choosing to the water fountain. On the other hand, if Manuel decides not to contribute to the water fountain, Hubert would maximize his benefit by choosing to the water fountain. These results illustrate . Complete the right-hand column of the following table, which shows the individual benefits of Hubert.Hint: You are not required to consider the benefit of Manuel.ManuelContributeDoesn't contributeContribute$420, --$HubertDoesn't contribute $510, --If Manuel decides to contribute to the water fountain, Hubert would maximize his benefit by choosingto the water fountain.On the other hand, if Manuel decides not to contribute to the water fountain, Hubert would maximize his benefit by choosingto the water fountain.These results illustrate 3. Voluntary contributions toward a public goodHubert and Manuel are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the waterfountain or to keep that $300 for a cell phone.Since a water fountain is a public good, both Hubert and Manuel will benefit from any contributions made by the other person. Specifically, every dollarthat either one of them contributes will bring each of them $0.70 of benefit. For example, if both Hubert and Manuel choose to contribute, then a totalof $600 would be contributed to the water fountain. So, Hubert and Manuel would each receive $420 of benefit from the water fountain, and theircombined benefit would be $840. This is shown in the upper left cell of the first table.Since a cell phone is a private good, if Hubert chooses to spend $300 on a cell phone, Hubert would get $300 of benefit from the cell phone andManuel wouldn't receive any benefit from Hubert's choice. If Hubert still spends $300 on a cell phone and Manuel chooses to contribute $300 to thewater fountain, Hubert would still receive the $210 of benefit from Manuel's generosity. In other words, if Hubert decides to keep the $300 for a cellphone and Manuel decides to contribute the $300 to the public project, then Hubert would receive a total benefit of $300+ $210 = $510, Manuelwould 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 Hubert and Manuel as previously described.ManuelContributes Doesn't contributeContributes$840HubertDoesn't contribute$720SOf the four cells of the table, which gives the greatest combined benefits to Hubert and Manuel?When neither Hubert nor Manuel contributes to the water fountainWhen Hubert contributes to the water fountain and Manuel doesn't, or vice versaWhen both Hubert and Manuel contribute to the water fountainNow, consider the incentive facing Hubert individually. The following table looks similar to the previous one, but this time, it is partially completed withthe individual benefit data for Hubert. As shown previously, if both Hubert and Manuel contribute to a public good, Hubert receives a benefit of$420. On the other hand, if Manuel contributes to the water fountain and Hubert does not, Hubert receives a benefit of $510.

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3. Voluntary contributions toward a public good Hubert and Manuel are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a cell phone. Since a water fountain is a public good, both Hubert and Manuel 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 Hubert and Manuel choose to contribute, then a total of $600 would be contributed to the water fountain. So, Hubert and Manuel 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. Since a cell phone is a private good, if Hubert chooses to spend $300 on a cell phone, Hubert would get $300 of benefit from the cell phone and Manuel wouldn't receive any benefit from Hubert's choice. If Hubert still spends $300 on a cell phone and Manuel chooses to contribute $300 to the water fountain, Hubert would still receive the $210 of benefit from Manuel's generosity. In other words, if Hubert decides to keep the $300 for a cell phone and Manuel decides to contribute the $300 to the public project, then Hubert would receive a total benefit of $300 + $210 = $510, Manuel 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 Hubert and Manuel as previously described. Manuel Contributes Doesn't contribute Contributes $840 Hubert Doesn't contribute $720 Of the four cells of the table, which gives the greatest combined benefits to Hubert and Manuel? O When neither Hubert nor Manuel contributes to the water fountain O When Hubert contributes to the water fountain and Manuel doesn't, or vice versa When both Hubert and Manuel contribute to the water fountain Now, consider the incentive facing Hubert individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Hubert. As shown previously, if both Hubert and Manuel contribute to a public good, Hubert receives a benefit of $420. On the other hand, if Manuel contributes to the water fountain and Hubert does not, Hubert receives a benefit of $510.

3. Voluntary contributions toward a public good Hubert and Manuel are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a cell phone. Since a water fountain is a public good, both Hubert and Manuel 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 Hubert and Manuel choose to contribute, then a total of $600 would be contributed to the water fountain. So, Hubert and Manuel 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. Since a cell phone is a private good, if Hubert chooses to spend $300 on a cell phone, Hubert would get $300 of benefit from the cell phone and Manuel wouldn't receive any benefit from Hubert's choice. If Hubert still spends $300 on a cell phone and Manuel chooses to contribute $300 to the water fountain, Hubert would still receive the $210 of benefit from Manuel's generosity. In other words, if Hubert decides to keep the $300 for a cell phone and Manuel decides to contribute the $300 to the public project, then Hubert would receive a total benefit of $300 + $210 = $510, Manuel 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 Hubert and Manuel as previously described. Manuel Contributes Doesn't contribute Contributes $840 Hubert Doesn't contribute $720 Of the four cells of the table, which gives the greatest combined benefits to Hubert and Manuel? O When neither Hubert nor Manuel contributes to the water fountain O When Hubert contributes to the water fountain and Manuel doesn't, or vice versa When both Hubert and Manuel contribute to the water fountain Now, consider the incentive facing Hubert individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Hubert. As shown previously, if both Hubert and Manuel contribute to a public good, Hubert receives a benefit of $420. On the other hand, if Manuel contributes to the water fountain and Hubert does not, Hubert receives a benefit of $510.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Hubert and Manuel are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water fountain or to keep that $300 for a cell phone.

Since a water fountain is a public good, both Hubert and Manuel 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 Hubert and Manuel choose to contribute, then a total of $600 would be contributed to the water fountain. So, Hubert and Manuel 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.

Since a cell phone is a private good, if Hubert chooses to spend $300 on a cell phone, Hubert would get $300 of benefit from the cell phone and Manuel wouldn't receive any benefit from Hubert's choice. If Hubert still spends $300 on a cell phone and Manuel chooses to contribute $300 to the water fountain, Hubert would still receive the $210 of benefit from Manuel's generosity. In other words, if Hubert decides to keep the $300 for a cell phone and Manuel decides to contribute the $300 to the public project, then Hubert would receive a total benefit of $300+$210=$510$300+$210=$510, Manuel 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 Hubert and Manuel as previously described.

	Manuel
Contributes	Doesn't contribute
Hubert	Contributes	$840
Doesn't contribute	$720

Of the four cells of the table, which gives the greatest combined benefits to Hubert and Manuel?

When neither Hubert nor Manuel contributes to the water fountain

When Hubert contributes to the water fountain and Manuel doesn't, or vice versa

When both Hubert and Manuel contribute to the water fountain

Now, consider the incentive facing Hubert individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Hubert. As shown previously, if both Hubert and Manuel contribute to a public good, Hubert receives a benefit of $420. On the other hand, if Manuel contributes to the water fountain and Hubert does not, Hubert receives a benefit of $510.

Complete the right-hand column of the following table, which shows the individual benefits of Hubert.

Hint: You are not required to consider the benefit of Manuel.

	Manuel
Contribute	Doesn't contribute
Hubert	Contribute	$420, --	, --
Doesn't contribute	$510, --	, --

If Manuel decides to contribute to the water fountain, Hubert would maximize his benefit by choosing to the water fountain. On the other hand, if Manuel decides not to contribute to the water fountain, Hubert would maximize his benefit by choosing to the water fountain.

These results illustrate .

Complete the right-hand column of the following table, which shows the individual benefits of Hubert.
Hint: You are not required to consider the benefit of Manuel.
Manuel
Contribute
Doesn't contribute
Contribute
$420, --
$
Hubert
Doesn't contribute $510, --
If Manuel decides to contribute to the water fountain, Hubert would maximize his benefit by choosing
to the water fountain.
On the other hand, if Manuel decides not to contribute to the water fountain, Hubert would maximize his benefit by choosing
to the water fountain.
These results illustrate

3. Voluntary contributions toward a public good
Hubert and Manuel are considering contributing toward the creation of a water fountain. Each can choose whether to contribute $300 to the water
fountain or to keep that $300 for a cell phone.
Since a water fountain is a public good, both Hubert and Manuel 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 Hubert and Manuel choose to contribute, then a total
of $600 would be contributed to the water fountain. So, Hubert and Manuel 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.
Since a cell phone is a private good, if Hubert chooses to spend $300 on a cell phone, Hubert would get $300 of benefit from the cell phone and
Manuel wouldn't receive any benefit from Hubert's choice. If Hubert still spends $300 on a cell phone and Manuel chooses to contribute $300 to the
water fountain, Hubert would still receive the $210 of benefit from Manuel's generosity. In other words, if Hubert decides to keep the $300 for a cell
phone and Manuel decides to contribute the $300 to the public project, then Hubert would receive a total benefit of $300+ $210 = $510, Manuel
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 Hubert and Manuel as previously described.
Manuel
Contributes Doesn't contribute
Contributes
$840
Hubert
Doesn't contribute
$720
S
Of the four cells of the table, which gives the greatest combined benefits to Hubert and Manuel?
When neither Hubert nor Manuel contributes to the water fountain
When Hubert contributes to the water fountain and Manuel doesn't, or vice versa
When both Hubert and Manuel contribute to the water fountain
Now, consider the incentive facing Hubert individually. The following table looks similar to the previous one, but this time, it is partially completed with
the individual benefit data for Hubert. As shown previously, if both Hubert and Manuel contribute to a public good, Hubert receives a benefit of
$420. On the other hand, if Manuel contributes to the water fountain and Hubert does not, Hubert receives a benefit of $510.

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