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?