arry, Megan, Raphael, Susan, and Janet share a five-bedroom house and are all huge Pittsburgh Penguins fans. The only way they can watch every way 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 haracteristics of a nonexcludable public good: it is nonrival and nonexcludable. The following table shows the benefit (per month) that each ommate receives from the service. Note that the average benefit from the service is $37 per person. Roommate Larry Megan Raphael Susan Janet Benefit (Dollars) 20 30 40 45 50 is efficient for the roommates to buy the satellite TV service if it doesn't cost more than $ uppose 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 ervice, the cost will be split equally among all the roommates, whether or not they voted in favor of the service. 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? per month. the price of satellite TV service is $195 (or $39 per roommate), then under majority rule: Because two roommates receive more benefit than Raphael does, and two roommates receive less benefit than Raphael does, Raphael's is the critical vote. Because Janet's benefit is the greatest, he should have more say in the matter than the others. Because Larry only receives $20 worth of benefit, she shouldn't have to pay. Because Megan's benefit is the same as the average benefit, Megan's is the critical vote. They will buy the service, which is the efficient outcome. They will not buy the service, even though it would be efficient to buy it. per month.
arry, Megan, Raphael, Susan, and Janet share a five-bedroom house and are all huge Pittsburgh Penguins fans. The only way they can watch every way 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 haracteristics of a nonexcludable public good: it is nonrival and nonexcludable. The following table shows the benefit (per month) that each ommate receives from the service. Note that the average benefit from the service is $37 per person. Roommate Larry Megan Raphael Susan Janet Benefit (Dollars) 20 30 40 45 50 is efficient for the roommates to buy the satellite TV service if it doesn't cost more than $ uppose 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 ervice, the cost will be split equally among all the roommates, whether or not they voted in favor of the service. 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? per month. the price of satellite TV service is $195 (or $39 per roommate), then under majority rule: Because two roommates receive more benefit than Raphael does, and two roommates receive less benefit than Raphael does, Raphael's is the critical vote. Because Janet's benefit is the greatest, he should have more say in the matter than the others. Because Larry only receives $20 worth of benefit, she shouldn't have to pay. Because Megan's benefit is the same as the average benefit, Megan's is the critical vote. They will buy the service, which is the efficient outcome. They will not buy the service, even though it would be efficient to buy it. per month.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Larry, Megan, Raphael, Susan, and Janet share a five-bedroom house and are all huge Pittsburgh Penguins 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 $37 per person.
Benefit
Roommate (Dollars)
Larry
20
Megan
30
Raphael
40
Susan
45
Janet
50
It is efficient for the roommates to buy the satellite TV service it doesn't cost more than $
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?
If the price of satellite TV service is $195 (or $39 per roommate), then under majority rule:
per month.
O Because two roommates receive more benefit than Raphael does, and two roommates receive less benefit than Raphael does, Raphael's
is the critical vote.
O Because Janet's benefit is the greatest, he should have more say in the matter than the others.
O Because Larry only receives $20 worth of benefit, she shouldn't have to pay.
O Because Megan's benefit is the same as the average benefit, Megan's is the critical vote.
O They will buy the service, which is the efficient outcome.
O They will not buy the service, even though it would be efficient to buy it.
O They will buy the service, even though it is not efficient to do so.
Making social decisions by majority rule
per month.
in an economically efficient outcome.
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