Department of Economics
Principles of Microeconomics
and Fred would like to hire a cleaning service to clean their apartment each
week. The value of the cleaning
is $35 to Ned and $100 to Fred. Regardless
of who pays for the service, the entire apartment gets cleaned.
the most the cleaning service can charge per week and still be assured of
being hired by one of them?
the competitive fee for the cleaning service is $80 per week.
The owner of the apartment complex proposes that each of you pay 50% of
the weekly fee. Will you and your
roommate agree to the landlord's proposal?
Will Ned ever take it upon himself to hire the cleaning service if Fred
refuses to contribute? Yes No
Will Fred ever hire the cleaning service if Ned refuses to contribute? Yes
Fred tells Ned that he will not hire the cleaning service unless Ned
contributes. What will be the net cost to Fred of the cleaning