ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Five roommates are planning to spend the weekend
in their apartment watching movies, and they are
debating how many movies to watch. The table
below shows each roommate’s
each of the movies:
Ava Ridley Spike Kathryn Quentin
First film $14 $10 $8 $4 $2
Second film 12 8 4 2 0
Third film 10 6 2 0 0
Fourth film 6 2 0 0 0
Fifth film 2 0 0 0 0
A movie on their streaming service costs $15, which the
roommates split equally, so each pays $3 per movie.
a. What is the efficient number of movies to watch
(that is, the number that maximizes total surplus)?
b. For each roommate, what is the preferred number
of movies to watch?
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