Sarah and Jen share a two bedroom house. During the summer, they run an air conditioner in
Question:
Sarah and Jen share a two bedroom house. During the summer, they run an air conditioner in the living room, but the electricity bills have been costly.
(a) Is the use of a living room air conditioner excludable for the two roommates?
(b) Is the use of the air conditioner rival in consumption for the two roommates?
Sarah and Jen figure that each additional hour they run the air conditioner costs them $4. Sarah's daily demand is given by pSarah = 6 -19, and Jen's daily demand is given by plen = 4 - 19, where q is the number of hours the air conditioner runs.
(c) If Sarah and Jen can coordinate and make a joint decision on how many hours to run the air conditioner, how many hours will they run it?
(d) How much will they individually pay for the electricity?
(e) Suppose instead of having a living room air conditioner, Sarah and Jen each have an air conditioner in their separate bedrooms, and the electricity company meters each air conditioner separately (so that Sarah and Jen receive separate electricity bills). How would your answers to the above questions change?