Ana and Dina are considering contributing toward the creation of a public park. Each can choose whether to contribute $300 to the public park or tokeep that $300 for a pool table.Since a public park is a public good, both Ana and Dina will benefit from any contributions made by the other person. Specifically, every dollar thateither one of them contributes will bring each of them $0.90 of benefit. For example, if both Ana and Dina choose to contribute, then a total of $600would be contributed to the public park. So, Ana and Dina would each receive $540 of benefit from the public park, and their combined benefit wouldbe $1,080. This is shown in the upper left cell of the first table.Since a pool table is a private good, if Ana chooses to spend $300 on a pool table, Ana would get $300 of benefit from the pool table and Dinawouldn't receive any benefit from Ana's choice. If Ana still spends $300 on a pool table and Dina chooses to contribute $300 to the public park, Anawould still receive the $270 of benefit from Dina's generosity. In other words, if Ana decides to keep the $300 for a pool table and Dina decides tocontribute the $300 to the public project, then Ana would receive a total benefit of $300 + $270 $570, Dina would receive a total benefit of $270,and their combined benefit would be $840. This is shown in the lower left cell of the first table.=Complete the following table, which shows the combined benefits of Ana and Dina as previously described.DinaContributes Doesn't contributeContributes$Ana$1,080$840Doesn't contribute$Of the four cells of the table, which gives the greatest combined benefits to Ana and Dina?OLOF8(E6(F7M+F9CJF10-OF1128F12Lock● X5:28 PM6/12/2022InsertPrt ScA-Z61Del When neither Ana nor Dina contributes to the public parkO When Ana contributes to the public park and Dina doesn't, or vice versaNow, consider the incentive facing Ana individually. The following table looks similar to the previous one, but this time, it is partially completed withthe individual benefit data for Ana. As shown previously, if both Ana and Dina contribute to a public good, Ana receives a benefit of $540. On theother hand, if Dina contributes to the public park and Ana does not, Ana receives a benefit of $570.Complete the right-hand column of the following table, which shows the individual benefits of Ana.Hint: You are not required to consider the benefit of Dina.DinaDoesn't contributeContributeContribute$540,--Doesn't contribute $570,--Ana$$If Dina decides to contribute to the public park, Ana would maximize her benefit by choosinghand, if Dina decides not to contribute to the public park, Ana would maximize her benefit by choosingto the public park. On the otherto the public park.These results illustrate$75:28 PM6/12/2022

Contribution margin, or dollar commitment per unit, is the selling cost per unit less the variable…

d, both Ana and Dina will benefit from any contributions made by the other person. Sp ll bring each of them $0.90 of benefit. For example, if both Ana and Dina choose to com c park. So, Ana and Dina would each receive $540 of benefit from the public park, and upper left cell of the first table. mod, if Ana chooses to spend $300 on a pool table, Ana would get $300 of benefit from th m Ana's choice. If Ana still spends $300 on a pool table and Dina chooses to contribute $ enefit from Dina's generosity. In other words, if Ana decides to keep the $300 for a pool c project, then Ana would receive a total benefit of $300 + $270 $570, Dina would rect ld be $840. This is shown in the lower left cell of the first table. = which shows the combined benefits of Ana and Dina as previously described. Dina Contributes Doesn't contribute $1,080 $ $840 which gives the greatest combined benefits to Ana and Dina?

d, both Ana and Dina will benefit from any contributions made by the other person. Sp ll bring each of them $0.90 of benefit. For example, if both Ana and Dina choose to com c park. So, Ana and Dina would each receive $540 of benefit from the public park, and upper left cell of the first table. mod, if Ana chooses to spend $300 on a pool table, Ana would get $300 of benefit from th m Ana's choice. If Ana still spends $300 on a pool table and Dina chooses to contribute $ enefit from Dina's generosity. In other words, if Ana decides to keep the $300 for a pool c project, then Ana would receive a total benefit of $300 + $270 $570, Dina would rect ld be $840. This is shown in the lower left cell of the first table. = which shows the combined benefits of Ana and Dina as previously described. Dina Contributes Doesn't contribute $1,080 $ $840 which gives the greatest combined benefits to Ana and Dina?

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 6PA

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