Business, 14.07.2020 21:01 nicolashernandez347

Cho and Ginny are considering contributing toward the creation of a building mural. Each can choose whether to contribute $300 to the building mural or to keep that $300 for a new suit. Since a building mural is a public good, both Cho and Ginny 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 Cho and Ginny choose to contribute, then a total of $600 would be contributed to the building mural. So, Cho and Ginny would each receive $540 of benefit from the building mural, and their combined benefit would be $1,080. Since a new suit is a private good, if Cho chooses to spend $300 on a new suit, Cho would get $300 of benefit from the new suit and Ginny wouldn't receive any benefit from Cho's choice. If Cho still spends $300 on a new suit and Ginny chooses to contribute $300 to the building mural, Cho would still receive the $270 of benefit from Ginny's generosity. In other words, if Cho decides to keep the $300 for a new suit and Ginny decides to contribute the $300 to the public project, then Cho would receive a total benefit of $300+$270=$570$300+$270=$570 , Ginny would receive a total benefit of $270, and their combined benefit would be $840. Complete the following table, which shows the combined benefits of Cho and Ginny as previously described.

Ginny
Contributes Doesn’t contribute
Cho Contributes $840
Doesn’t contribute $720

Of the four cells of the table, which gives the greatest combined benefits to Cho and Ginny?

a. When neither Cho nor Ginnya contributes to the building mural
b. When both Cho nor Ginny contribute to the building mural
c. When Cho contributes to the building mural and kate doesn't, or vice versa

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Cho and Ginny are considering contributing toward the creation of a building mural. Each can choose...

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