Side Example- Cost cross-subsidisation 20 Assume 3 couples eat out at a restaurant together: The record of each couple's consumption of resources for the evening are as follows: Couple A Couple B Couple C Entree $ 12.00 $ 24.00 Main Course 50.00 52.00 50.00 Drinks 2 beers 14.00 Wine 30.00 1 beer 14.00 2 squash 7.00 Champagne 24.00 Wine 30.00 Pudding 18.00 Desert Tart 15.00 Meringue 16.50 Coffee. | 2 cappuccino's 7.00 2 cappuccino's 7.00 short black 3.00 Cafe late 4.50 105.00 171.50 101.50 The table decides to split the final bill equally ( smoothing ) 3 ways: In this way, each couple pays $ 126.00: However, Couple C subsidizes Couples A & B by $ 24.50 and couple A subsidizes couple B by $ 21.00 The smoothing has distorted the real costs of the evening out