National defense is a good that is nonexcludable and nonrival in consumption. Suppose that instead of national defense being
paid for with tax dollars national defense is paid for by voluntary contributions from (potentially) all individuals within Latvia.
Cedric, who is a Latvian citizen, must decide whether he wants to contribute to the national-defense budget. Further, suppose
that there are a total of 10 citizens, including Cedric. For the optimal amount of safety, each citizen should pay $10. Every $1
contributed (by anyone) to the national defense leads to increased security, which each person values at $0.40. This means that
every dollar spent on defense is worth $4.00 to Latvia as a whole.
How much does Cedric personally value the increase in national defense when he contributes $10 to the defense fund?
Cedric's personal value: S
If contributions are voluntary, and assuming people rationally maximize their utility, what is the total contributed to
national defense?
