you have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the math department. From experience, you know that going to see a movie gives you $20 worth of enjoyment. What is the economic surplus
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Suppose you are considering going to the movies and You place a S12 value on your anticipated enjoyment ofthe movie The ticket price is S6 and you would be giving Up two hours of work where You earn S5 per hour You would go to work; the opportunity cost of the movies exceeds the expected benefit the movies; your incentive is the $6 excess expected benefit: the movies; vour enjoyment will exceed the lost wages by $2. the movies; the benefit of $18 exceeds the lost wages
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Two action movies are playing at your movie-theater complex. You have a half-price coupon for one. However, you choose to see the other. How might this still be an example of economizing?
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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: Buying a DVD 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. From the standpoint of each roommate, what is the preferred number of movies? c. What is the preference of the median roommate? d. If the roommates held a vote on the efficient outcome versus the median voter's preference, how would each person vote? Which outcome would get a majority? e. If one of the roommates proposed a different number of movies, could his proposal beat the winner from part (d) in a vote? f. Can majority rule be counted on to reach efficient outcomes in the provision of public goods?
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