pic 4 Assignment 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) Van Carlos Felix Larry 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 Topic 4 Assignment a public good. If it costs $12 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. Roommate Total Willingness to Pay Consumer Surplus (Dollars) (Dollars) Van Carlos Felix Larry 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 roommate has an incentive to 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 Van is asked his willingness to pay, he will have an incentive to tell the truth. O True O False This examples teaches you that the optimal provision of a public good will occur if individuals the good. SalLII an incentive to hide their valuation of Save & Continue Continue without saving

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
None
pic 4 Assignment
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)
Van
Carlos Felix
Larry
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
Topic 4 Assignment
a public good.
If it costs $12 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.
Roommate
Total Willingness to Pay Consumer Surplus
(Dollars)
(Dollars)
Van
Carlos
Felix
Larry
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 roommate has an incentive to
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 Van is asked his willingness to pay, he will have an incentive to tell the truth.
O True
O False
This examples teaches you that the optimal provision of a public good will occur if individuals
the good.
SalLII
an incentive to hide their valuation of
Save & Continue
Continue without saving
Transcribed Image Text:pic 4 Assignment 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) Van Carlos Felix Larry 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 Topic 4 Assignment a public good. If it costs $12 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. Roommate Total Willingness to Pay Consumer Surplus (Dollars) (Dollars) Van Carlos Felix Larry 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 roommate has an incentive to 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 Van is asked his willingness to pay, he will have an incentive to tell the truth. O True O False This examples teaches you that the optimal provision of a public good will occur if individuals the good. SalLII an incentive to hide their valuation of Save & Continue Continue without saving
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education