Now, consider the incentive facing Beth individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Beth. As shown previously, if both Beth and Eleanor contribute to a public good, Beth receives a benefit of $480. On the other hand, if Eleanor contributes to the building mural and Beth does not, Beth receives a benefit of $640. Complete the right-hand column of the following table, which shows the individual benefits of Beth. Hint: You are not required to consider the benefit of Eleanor. Eleanor contribute doesn't contribute Contribute $480 ??? Beth Doesn't contribute $640 ??? If Eleanor decides to contribute to the building mural, Beth would maximize her benefit by choosing TO CONTRIBUTE/ NOT CONTRIBUTE to the building mural. On the other hand, if Eleanor decides not to contribute to the building mural, Beth would maximize her benefit by choosing TO CONTRIBUTE/ NOT CONTRIBUTE to the building mural. These results illustrate WHY MARKETS ARE EFFICENT/ THE CREATION OF A POSTIVE EXERNALITY/ THE FREE-RIDER PROBLEM/ THE TTRADGETY OF THE COMMONS.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter1: What Economics Is About

Section: Chapter Questions

Problem 19QP

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Now, consider the incentive facing Beth individually. The following table looks similar to the previous one, but this time, it is partially completed with the individual benefit data for Beth. As shown previously, if both Beth and Eleanor contribute to a public good, Beth receives a benefit of $480. On the other hand, if Eleanor contributes to the building mural and Beth does not, Beth receives a benefit of $640.

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

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

Eleanor

contribute doesn't contribute

Contribute $480 ???

Beth

Doesn't contribute $640 ???

If Eleanor decides to contribute to the building mural, Beth would maximize her benefit by choosing TO CONTRIBUTE/ NOT CONTRIBUTE to the building mural. On the other hand, if Eleanor decides not to contribute to the building mural, Beth would maximize her benefit by choosing TO CONTRIBUTE/ NOT CONTRIBUTE to the building mural.

These results illustrate WHY MARKETS ARE EFFICENT/ THE CREATION OF A POSTIVE EXERNALITY/ THE FREE-RIDER PROBLEM/ THE TTRADGETY OF THE COMMONS.

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