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Ben and Gary are students at Berkeley College. They share an apartment that is owned by Gary. Gary is considering subscribing to an internet provider

Ben and Gary are students at Berkeley College. They share an apartment that is owned by Gary. Gary is considering subscribing to an internet provider that has the following packages available.

Package

Per month

  1. Internet access

$80

  1. Phone services

$36

  1. Internet access + Phone services

$85

Ben spends most of his time on Internet while Gray prefers to spend his time talking on the phone rather than using the internet. They agree that the purchase of the $85 total package is a win-win situation.

Allocate the $85 between Ben and Gray using (a) the stand-alone cost-allocation method, (b) the incremental cost allocation method with Ben being the primary user, (C) the incremental cost allocation method with Gray being the primary user, and (d) the Shapley value method.

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