Question

QUESTION 4 Veronica, Jimmy and Rajesh are saving up to buy a new XBOX (a gaming console). The three are happy to play together and they can each use it whenever they wish. The XBOX they are looking at costs $400 and they have agreed to purchase it. However, they also wish to buy games and extra controllers valued at 76 dollars. If Veronica values the additional games and extra controllers at 35 dollars and Jimmy values them at 11 dollars, how much must Rajesh value them if the extra equipment is to be purchased? Answer to the nearest whole dollar figure (with no decimal points, spaces, $ signs, or commas in your answer).

Answer 1

Solution:

The cost of extra controllers is $76.

The three friends have agreed to purchase the extra controllers in combined manner.

So, the combined willingness to pay of the three friends should be equal to or more than the cost of extra controllers then they would purchase the extra controllers. Veronica values the extra controllers at $35 and Jimmy values the extra controllers at $11.

So,

Calculate the value of extra equipment to Rajesh - Value

= Cost of extra equipment - maximum willingness to pay of Veronica - maximum willingness to pay of Jimmy Value

= $76 - $35 - $11 = $30

Thus, The Rajesh must value the extra equipment at 30 if the extra equipment is to be purchased.