Please help me answer these. Thank you.
Kenji and Paolo are considering contributing toward the creation of a botanical garden. Each can choose whether to contribute $300 to the botanical garden or to keep that $300 for a cell phone.
Since a botanical garden is a public good, both Kenji and Paolo will benefit from any contributions made by the other person. Specifically, every dollar
that either one of them contributes will bring each of them $0.90 of benefit.For example, if both Kenji and Paolo choose to contribute, then a total of
$600 would be contributed to the botanical garden. So, Kenji and Paolo would each receive $540 of benefit from the botanical garden, and their
combined benefit would be $1,080. This is shown in the upper left cell of the first table.
Since a cell phone is a private good,if Kenji chooses to spend $300 on a cell phone, Kenji would get $300 of benefit from the cell phone and Paolo
wouldn't receive any benefit from Kenji's choice.If Kenji still spends $300 on a cell phone and Paolo chooses to contribute $300 to the botanical
Paolo decides to contribute the $300 to the public project, then Kenji would receive a total benefit of $300 + $270 = $570, Paolo 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 Kenji and Paolo as previously described.
Paolo Contributes Doesn't contribute
Contributes
$1,080 $840
s s
Kenji
Doesn't contribute
Of the four cells of the table, which gives the greatest combined benefits to Kenji and Paolo?
O When both Kenji and Paolo contribute to the botanical garden
O When neither Kenji nor Paolo contributes to the botanical garden
O When Kenji contributes to the botanical garden and Paolo doesn't, or vice versa
Now, consider the incentive facing Kenji individually. The following table looks similar to the previous one, but this time, it is partially completed with
the individual benefit data for Kenji.As shown previously, if both Kenji and Paolo contribute to a public good, Kenji receives a benefit of $540. On
the other hand, if Paolo contributes to the botanical garden and Kenji does not, Kenji receives a benefit of $570
Complete the right-hand column of the following table which shows the individual benefits of Kenji.
Hint: You are not required to consider the benefit of Paolo.
Paolo Don't contribute $ $
Contribute Contribute $540, -- Don't contribute $570, --
Kenji
If Paolo decides to contribute to the botanical garden, Kenji would maximize his benefit by choosing to to the botanical garden. On the other hand, if Paolo decides not to contribute to the botanical garden, Kenji would maximize his benefit by choosing to to the botanical garden.
These results illustrate
