Five roommates are planning to spend the weekend in their dorm room watching movies, and they are debating how many movies to watch. Here is their willingness to pay:
Five roommates are planning to spend the weekend in their dorm room watching movies, and they are debating how many movies to watch. Here is their willingness to pay:
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter22: Frontiers Of Microeconomics
Section: Chapter Questions
Problem 6PA
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Question
Five roommates are planning to spend the weekend in their dorm room watching movies, and they are debating how many movies to watch. Here is their willingness to pay :
|
Willingness to Pay
|
||||
---|---|---|---|---|---|
(Dollars)
|
|||||
Yakov
|
Charles
|
Gilberto
|
Lorenzo
|
Sam
|
|
First film | 18 | 15 | 10 | 8 | 5 |
Second film | 16 | 12 | 8 | 5 | 1 |
Third film | 14 | 9 | 6 | 0 | 0 |
Fourth film | 12 | 6 | 3 | 0 | 0 |
Fifth film | 10 | 3 | 0 | 0 | 0 |
Buying a DVD costs $20, which the roommates split equally, so each pays $4 per movie.
The efficient number of movies to watch (that is, the number that maximizes total surplus) is
movies.
Complete the following table by indicating the preferred number of movies from the standpoint of each roommate.
Roommate
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0
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1
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2
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3
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4
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5
|
|
---|---|---|---|---|---|---|---|
Yakov |
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Charles |
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Gilberto |
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Lorenzo |
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Sam |
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The median roommate prefers
movies.
Suppose the roommates held a vote on the efficient outcome versus the median voter's preference.
Complete the following table by indicating how each person would vote in this case.
Roommate
|
Efficient Outcome
|
Median Voter Outcome
|
|
---|---|---|---|
Yakov |
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Charles |
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Gilberto |
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Lorenzo |
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Sam |
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The winning outcome according to majority rule is the .
If one of the roommates proposed a different number of movies, his proposal could beat the winner from the previous vote.
True
False
Majority rule be counted on to reach efficient outcomes in the provision of public goods.
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