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5. Majority rule and efficiency Carlos, Deborah, Felix, Janet, and Amy share a five-bedroom house and are all huge New England Patriots fans. The only way they can watch every away game is by getting satellite TV service. Since the TV is located in their living room, once they have satellite service, the service has the characteristics of a nonexcludable public good: It is nonrival and nonexcludable. The following table shows the benefit (per month) that each roommate receives from the service. Note that the average benefit from the service is $48 per person. Benefit Roommate (Dollars) Carlos 20 Deborah 30 Felix 40 60 90 Janet Amy It is efficient for the roommates to buy the satellite TV service if it doesn't cost more than $ per month.

5. Majority rule and efficiency Carlos, Deborah, Felix, Janet, and Amy share a five-bedroom house and are all huge New England Patriots fans. The only way they can watch every away game is by getting satellite TV service. Since the TV is located in their living room, once they have satellite service, the service has the characteristics of a nonexcludable public good: It is nonrival and nonexcludable. The following table shows the benefit (per month) that each roommate receives from the service. Note that the average benefit from the service is $48 per person. Benefit Roommate (Dollars) Carlos 20 Deborah 30 Felix 40 60 90 Janet Amy It is efficient for the roommates to buy the satellite TV service if it doesn't cost more than $ per month.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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5. Majority rule and efficiency Carlos, Deborah, Felix, Janet, and Amy share a five-bedroom house and are all huge New England Patriots fans. The only way they can watch every away game is by getting satellite TV service. Since the TV is located in their living room, once they have satellite service, the service has the characteristics of a nonexcludable public good: It is nonrival and nonexcludable. The following table shows the benefit (per month) that each roommate receives from the service. Note that the average benefit from the service is $48 per person. Benefit Roommate (Dollars) Carlos 20 Deborah 30 Felix Janet Amy 40 60 90 It is efficient for the roommates to buy the satellite TV service if it doesn't cost more than $ per month.
Transcribed Image Text:5. Majority rule and efficiency Carlos, Deborah, Felix, Janet, and Amy share a five-bedroom house and are all huge New England Patriots fans. The only way they can watch every away game is by getting satellite TV service. Since the TV is located in their living room, once they have satellite service, the service has the characteristics of a nonexcludable public good: It is nonrival and nonexcludable. The following table shows the benefit (per month) that each roommate receives from the service. Note that the average benefit from the service is $48 per person. Benefit Roommate (Dollars) Carlos 20 Deborah 30 Felix Janet Amy 40 60 90 It is efficient for the roommates to buy the satellite TV service if it doesn't cost more than $ per month.
Suppose the roommates decide to vote on whether to buy the satellite TV service under majority rule. In addition, they agree that if they get the service, the cost will be split equally among all the roommates, whether or not they voted in favor of the service. A majority of roommates will vote to buy the service as long as it doesn't cost more than Which statement best illustrates the concept of the median voter model in this example? O Because two roommates receive more benefit than Felix does, and two roommates receive less benefit than Felix does, Felix's is the critical vote. O Because Carlos only receives $20 worth of benefit, she shouldn't have to pay. Because Amy's benefit is the greatest, he should have more say in the matter than the others. Because Deborah's benefit is the same as the average benefit, Deborah's is the critical vote. If the price of satellite TV service is $220 (or $44 per roommate), then under majority rule: They will not buy the service, even though it would be efficient to buy it. They will buy the service, even though it is not efficient to do so. They will buy the service, which is the efficient outcome. Making social decisions by majority rule, in an economically efficient outcome. per month,
Transcribed Image Text:Suppose the roommates decide to vote on whether to buy the satellite TV service under majority rule. In addition, they agree that if they get the service, the cost will be split equally among all the roommates, whether or not they voted in favor of the service. A majority of roommates will vote to buy the service as long as it doesn't cost more than Which statement best illustrates the concept of the median voter model in this example? O Because two roommates receive more benefit than Felix does, and two roommates receive less benefit than Felix does, Felix's is the critical vote. O Because Carlos only receives $20 worth of benefit, she shouldn't have to pay. Because Amy's benefit is the greatest, he should have more say in the matter than the others. Because Deborah's benefit is the same as the average benefit, Deborah's is the critical vote. If the price of satellite TV service is $220 (or $44 per roommate), then under majority rule: They will not buy the service, even though it would be efficient to buy it. They will buy the service, even though it is not efficient to do so. They will buy the service, which is the efficient outcome. Making social decisions by majority rule, in an economically efficient outcome. per month,
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