Four roommates are planning to spend the weekend in their dorm room watching old movies, and they are debating how many to watch. Here is their willingness to pay for each film:

	Willingness to Pay
(Dollars)
Kenji	Paolo	Van	Carlos
First film	10	9	8	3
Second film	8	7	6	2
Third film	6	5	4	1
Fourth film	4	3	2	0
Fifth film	2	1	0	0

Within the dorm room, the showing of a movie is or is not a public good.

If it costs $12 to rent a movie, the roommates should rent __________movies in order to maximize the total surplus.

Suppose the roommates choose to rent the optimal number of movies you just indicated and then split the cost of renting equally.

This means that each roommate will pay $___________

Complete the following table with each roommate '5 total willingness to pay for this many movies and the surplus each person obtains from watching the movies. Total Willingness to Pay Consumer Surplus Roomm ate (Dollars) (Dollars) Paolo E E Carlos E E In order to split the cost in a way that ensures that everyone benets, the cost could be divided up based on the benets each roommate receives. The practical problem with this solution is that each roommate has an incentive to V the value of the movies to him. Suppose they agree in advance to choose the efcient number and to split the cost of the movies equally. True or False: When Kenji is asked his willingness to pay, he will have an incentive to understate the value of the movies to him. 0 True 0 False