Solve part d,e and f.(f)What does this problem teach you about the optimal provision of public goods? 5. Four roommates are planning to spend the weekendin their dorm room watching old movies, and they are debating how many to watch. Here is theirwillingnessto pay for each film:DwayneJavierFirst filmSecond filmThird filmFourth filmFifth film$76543$5543 ~21Salman$3DOTN2100Chris$21000a. Within the dorm room, is the showing of a moviea public good? Why or why not?b. If it costs $8 to stream a movie, how many moviesshould the roommates stream to maximize totalsurplus?c. If they choose the optimal number from part_(b)and then split the cost of streaming the moviesequally, how much surplus does each personobtain from watching the movies?d. Is there any way to split the cost to ensure thateveryone benefits? What practical problems doesthis solution raise?e. Suppose they agree in advance to choose theefficient number and to split the cost of the moviesequally. When Dwayne is asked his willingness topay, will he have an incentive to tell the truth? Ifso why? If not, what will be be tempted to say?K

d) One method would be to divide the costs among the roommates according to the advantages they…

are debating how many to watch. Here is their willingness to pay for each film: Dwayne Javier First film Second film Third film Fourth film Fifth film $7 654 3 $5 4 3 2 1 Salman $3 210a Chris $2 1 aaa a. Within the dorm room, is the showing of a movie a public good? Why or why not? b. If it costs $8 to stream a movie, how many movies k

are debating how many to watch. Here is their willingness to pay for each film: Dwayne Javier First film Second film Third film Fourth film Fifth film $7 654 3 $5 4 3 2 1 Salman $3 210a Chris $2 1 aaa a. Within the dorm room, is the showing of a movie a public good? Why or why not? b. If it costs $8 to stream a movie, how many movies k

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Solve part d,e and f. (f)What does this problem teach you about the optimal provision of public goods?

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:
Dwayne
Javier
First film
Second film
Third film
Fourth film
Fifth film
$7
6
543
$5
543 ~
2
1
Salman
$3
DOTN
2
1
0
0
Chris
$2
1
0
0
0
a. Within the dorm room, is the showing of a movie
a public good? Why or why not?
b. If it costs $8 to stream a movie, how many movies
should the roommates stream to maximize total
surplus?
c. If they choose the optimal number from part_(b)
and then split the cost of streaming the movies
equally, how much surplus does each person
obtain from watching the movies?
d. Is there any way to split the cost to ensure that
everyone benefits? What practical problems does
this solution raise?
e. Suppose they agree in advance to choose the
efficient number and to split the cost of the movies
equally. When Dwayne is asked his willingness to
pay, will he have an incentive to tell the truth? If
so why? If not, what will be be tempted to say?
K

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