Table 11-1
Three wealthy families - the Johnsons,the Lincolns,and the Washingtons -are the only residents of a certain neighborhood in which the lawns are large and the streets are wide.The three families are considering the placement of one,two,or three elegant statues at entrances to the neighborhood.The table represents the individual families' willingness to pay,that is,the maximum amount that each family is willing to contribute to purchase and erect each statue.

-Refer to Table 11-1.Suppose the cost of each statue is $19,500 and the three families have agreed to split the costs of the statues equally.Which of the following statements is correct?

Question

Table 11-1
Three wealthy families - the Johnsons,the Lincolns,and the Washingtons -are the only residents of a certain neighborhood in which the lawns are large and the streets are wide.The three families are considering the placement of one,two,or three elegant statues at entrances to the neighborhood.The table represents the individual families' willingness to pay,that is,the maximum amount that each family is willing to contribute to purchase and erect each statue.
 
-Refer to Table 11-1.Suppose the cost of each statue is $19,500 and the three families have agreed to split the costs of the statues equally.Which of the following statements is correct?

Quizplus · Accepted Answer

The Washingtons would prefer to erect exactly three statues because their surplus is highest when they erect three statues. The Johnsons and the Lincolns would prefer to erect exactly two statues because their surplus is highest when they erect two statues. The maximum possible total surplus is $17,000 because this is the sum of the surpluses of the three families when they each erect their preferred number of statues.

Table 11-1 Three Wealthy Families - the Johnsons,the Lincolns,and the Washingtons -Are