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:
Within the dorm room, the showing of a movie ( IS OR IS NOT ) a public good. If it costs $8 to rent a movie, the roommates should rent__________movies in order to maximize the total surplus. Suppose the roommates choose to rent the optimal number of movies you just indicated and then split the cost of renting equally. This means that each roommate will pay $__________. Complete the following table with each roommate's total willingness to pay for this many movies and the surplus each person obtains from watching the movies.
In order to split the cost in a way that ensures that everyone benefits, the cost could be divided up based on the benefits each roommate receives. The practical problem with this solution is that each roommates has an incentive to ( UNDERSTATE OR OVERSTATE ) the value of the movies to him. Suppose they agree in advance to choose the efficient number and to split the cost of the movies equally. True or False: When Kevin is asked his willingness to pay, he will have an incentive to tell the truth. True False This examples teaches you that the optimal provision of a public good will occur if individuals ( DO NOT HAVE OR DO HAVE ) an incentive to hide their valuation of the good. |
5. Problems and Applications Q5 Four roommates are planning to spend the weekend in their dorm room watching o...
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...
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 (...
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...
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...
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...
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...
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...
On page 180 of the text there is a very simple personal example of three roommates who set up cost allocation. The allocation was for rent, TV, internet and groceries. The the cost allocation system was using the three roommates as equals so the cost allocation was the total cost divided by three. That method worked our for a short period of time then each roommate found specific reasons why that cost allocation system did not work "fairly". One example...