There are 30 inhabitants on an island. They have only two goods at their disposal: a private and a public one. The inhabitants can be divided into three equal numbered groups (10 persons in each group). The utility functions of each group are given by the following: 

Group1: U 1 (x, y) = 0.01x + ln(y), 

Group2: U 2 (x, y) = 100x + 100y and 

Group3: U 3 (x,y) = 10x + 10y, 

Where x stands for the private good and y is the quantity of public good supplied on the island. The cost of the private good is $1 per unit, while for the public good it is $1020 per unit. 

What is the Pareto-efficient level of public good on the island?

a. y = 1 

b. y = 10 

c. y = 100 

d. y = 1000 

e. None of the remaining answers is correct.

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