Return to Exercise 5 in Chapter 4, where Moe, Larry, and Curly are hiring the services of

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Return to Exercise 5 in Chapter 4, where Moe, Larry, and Curly are hiring the services of an acting coach. Suppose the coach’s fee is $15 per hour.
a. If the trio share the hourly cost equally, and they use majority voting to determine the number of hours of coaching to hire, how many hours will they choose? Is this close to the efficient quantity?
b. Suppose that the cost of hiring the coach is divided in the following way: Moe and Curly each pay $1 per hour, and Larry pays $13 per hour. Show that in this case majority voting leads to excessive spending on the acting coach.


Data From Exercise 5 Chapter 4

Moe, Larry, and Curly are struggling in their drama class and plan to hire an acting coach  to help them prepare a stage show. The tutor’s wages are $20 per hour. The marginal benefit  of each hour of coaching is given in the following table.

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Public Finance In Canada

ISBN: 9781259030772

5th Canadian Edition

Authors: Harvey S. Rosen, Ted Gayer, Jean-Francois Wen, Tracy Snoddon

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