Public Goods: Four roommates are planning to spend the weekend in their dorm room watching pay per view movies, and they are debating how many to watch. The following gives their willingness to pay (marginal benefit) for each film: Ang Greta Shonda J.J. First film $8 $5 $4 $2 Second film $6 $4 $2 $1 Third film $5 $3 $1 $0 Fourth film $1 $2 $0 $0 Fifth film $0 $1 $0 $0 Anyone in the room is able to watch a movie that is shown in the room, regardless of whether they helped pay for it, since as a roommate they are free to be in the room while it is on. Given this information, answer the following as briefly as possible:
a. Within the dorm room, is the showing of a movie a public good? Why or why not?
b. If it costs $8 for a movie, how many movies should the roommates purchase to maximize their total surplus?
c. If they choose the optimal number from part (b) and then split the cost of buying the movies equally, how much surplus does each person obtain from watching the movies? What would be the total surplus from buying the optimal number of movies?
d. Is there any way to split the cost of the optimal number of movies to ensure that everyone benefits? How could Ang benefit from misrepresenting his willingness to pay?
e. Suppose they agree in advance to choose the efficient number and split the cost of the movies equally. When Ang is asked his willingness to pay, will he have an incentive to lie in this scenario? If so, what might he say. If not, why?
Public Goods: Four roommates are planning to spend the weekend in their dorm room watching pay...
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Willingness to Pay (Dollars) Paolo Van Carlos Felix First film 10 9 6 Second film 97 42 Third film Fourth film Fifth film t》 Within the dorm room, the showing of a moviea public good If it costs $8 to rent a movie, the roommates should rent movies...
3. Problems 11-5 Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Willingness to Pay (Dollars) Andrew Darnell Jacques Musashi 6 First film Second film Third film Fourth film Fifth film Within the dorm room, the showing of a movie a public good. If it costs $8 to rent a movie, the roommates should rent 3 movies...
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Willingness to Pay (Dollars) Eric Kenji Paolo Van First film 10 9 8 3 Second film 8 7 6 2 Third film 6 5 4 1 Fourth film 4 3 2 0 Fifth film 2 1 0 0 Within the dorm room, the showing of a movie (...
5. Problems and Applications Q5 Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Willingness to Pay (Dollars) Kevin Rajiv Yakov Charles First film 10 9 6 3 Second film 9 7 4 2 Third film 8 5 2 1 Fourth film 7 3 0 0 Fifth film 6 1 0 0 Within the dorm room, the...
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Within the dorm room, the showing of a movie (is not or is) a public good. If it costs $12 to rent a movie, the roommates should rentmovies in order to maximize the total surplus. Suppose the roommates choose to rent the optimal number of movies you just...
5. Problems and Applications Q5 Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Willingness to Pay (Dollars) Andrew Darnell Jacques Musashi First film 10 9 6 3 Second film 9 7 4 2 Third film 8 5 2 1 Fourth film 7 3 0 0 Fifth film 6 1 0 0 Within the dorm room, the...
Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film: Orson Alfred Woody Ingmar Frist film 7 5 3 2 Second film 6 4 2 1 Third film 5 3 1 0 Fourth film 4 2 0 0 Fifth film 3 1 0 0 b. If it costs $8 to rent a video, how many videos should the...
8. Problems and Applications Q8 Five roommates are planning to spend the weekend in their dorm room watching movies, and they are debating how many movies to watch. Here is their willingness to pay: Willingness to Pay (Dollars) Shen Antonio Dmitri Manuel Jake First film 14 10 8 2 Second film 12 8 4 2 0 Third film 10 2 0 0 Fourth film 6 2 0 0 0 Fifth film 2 0 0 0 0 Buying a DVD costs...
Read the case: Netflix Inc.: The Second Act - Moving into Streaming and complete your case analysis. Discuss the following: 1) briefly summarize the key marketing strategy issues in the case that are still relevant TODAY in addition to contemporary issues you find via research; 2) make thorough recommendations on how the issues should be handled; 3) provide a justification for the recommendations. Case write-ups should be 3-5 pages, double spaced, 12 font size in Times New Roman. The case...