Question

Marcel, Winston and Derek are roommates. The tap water in their apartment is not safe to drink and they need to have bottled water delivered. Marcel values the water at $120 per month, Winston values the water at $90 per month and Derek values the water at $70 per month. The cost of the water delivery is $300 per month. If they vote on a “headcount tax” to split the fee, how will they vote?

1. They will all vote no because they can get water from the fountain at school.

2. Marcel will vote yes, but Winston and Derek will vote no.

3. Derek will vote no, but Marcel and Winston will vote yes.

4. All three will vote yes because they need clean water.

Answer 1

Total cost = 300$

On splitting, headcount tax = 300 / 3 = 100$ per person

For essential commodities, usually actual value to the consumer is much larger than the market price. But that is not the case in this example.

The $ values which Marcel, Winston and Derek put on the water is the maximum amount they are willing to pay for the water.

Marcel: 120 > 100 , thus he will vote YES

Winston: 90 < 100, thus he will vote NO

Derek: 70<100, thus he will vote NO

Answer- Option B : Marcel will vote yes, but Winston and Derek will vote no.