11. Three roommatesTinker, Evers, and Chanceshare an apartment. It is really cold outside, and they are considering...

Question:

11. Three roommates—Tinker, Evers, and Chance—share an apartment. It is really cold outside, and they are considering turning up the thermostat in the apartment by 1, 2, 3, or 4 degrees. They know that each time they raise the temperature in the apartment by 1 degree, their heating bill will rise by $8. Their individual marginal benefits from making it warmer in the apartment are as follows:

Marginal Benefit Increase in Temperature Tinker Evers Chance 1 degree $5 $4 $3 2 degrees $4 $3 $2 3 degrees $3 $2 $1 4 degrees $2 $1 $0

a. Find the marginal social benefit from making it 1, 2, 3, or 4 degrees warmer.

b. By how many degrees should they raise the temperature?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Macroeconomics

ISBN: 9780134492056

2nd Edition

Authors: Daron Acemoglu, David Laibson, John List

Question Posted: