Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

8. The Types of Goods

Public Goods: Demand Curve and Optimal Quantity

Microeconomics

8. The Types of Goods

Public Goods: Demand Curve and Optimal Quantity

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Multiple Choice

Two roommates plan to spend their evening with a marathon of Saw horror movies. Because it is a marathon, they must start with the first movie in the series and continue in order. Their willingness to pay for the rental of each movie is as follows:If each movie rental costs $6, how many movies should they rent?

One movie

Two movie

Three movies

Four movies

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Identify the willingness to pay for each movie by both roommates from the table. Ricky's willingness to pay is $9, $7, $5, and $3 for Saw I, II, III, and IV respectively. Martin's willingness to pay is $7, $5, $3, and $1 for Saw I, II, III, and IV respectively.

Calculate the total willingness to pay for each movie by adding Ricky's and Martin's willingness to pay. For Saw I, it is $9 + $7 = $16. For Saw II, it is $7 + $5 = $12. For Saw III, it is $5 + $3 = $8. For Saw IV, it is $3 + $1 = $4.

Compare the total willingness to pay for each movie with the cost of renting a movie, which is $6. Determine how many movies they should rent by checking if the total willingness to pay is greater than or equal to the cost.

For Saw I, the total willingness to pay is $16, which is greater than $6, so they should rent it. For Saw II, the total willingness to pay is $12, which is also greater than $6, so they should rent it. For Saw III, the total willingness to pay is $8, which is greater than $6, so they should rent it.

For Saw IV, the total willingness to pay is $4, which is less than $6, so they should not rent it. Therefore, they should rent three movies: Saw I, Saw II, and Saw III.