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: First film Second film Third film Fourth film Fifth film Willingness to Pay (Dollars) Paolo Van 10 9 8 6 4 2 75 3 1 Carlos Felix 8 3 2 1 6 4 2 0 Within the dorm room, the showing of a movie 0 0 If it costs $12 to rent a movie, the roommates should rent This means that each roommate will pay S a public good. 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.
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: First film Second film Third film Fourth film Fifth film Willingness to Pay (Dollars) Paolo Van 10 9 8 6 4 2 75 3 1 Carlos Felix 8 3 2 1 6 4 2 0 Within the dorm room, the showing of a movie 0 0 If it costs $12 to rent a movie, the roommates should rent This means that each roommate will pay S a public good. 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.
Chapter1: Making Economics Decisions
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Transcribed Image Text: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:
First film
Second film
Third film
Fourth film
Fifth film
Willingness to Pay
(Dollars)
Paolo
10
8
6
4
2
Van
9
7
5
3
1
Carlos Felix
8
3
2
1
0
0
6
4
2
0
Within the dorm room, the showing of a movie
If it costs $12 to rent a movie, the roommates should rent
a public good.
This means that each roommate will pay S
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.
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