John has lot of issues, both mental and physical. He has acontagious disease that
increases in the probability that those in the same room withhim will get diarrhea. Luckily the only people he comes in contactwith are his 4747 students. In addition, his mental conditioncauseshim to be a jerk.
The good news is there are pills he can take for bothconditions and the more he takes the better he is (nicer and lesscontagious).
The bad news is that the pills are expensive.
Assume he has to take pills in whole: no fractions.
Being an economics professor, he takes, each day, more pillsas long as his MPB is greater than or equal to his MPC.
He would likely take more pills if those additional pills werefree to him.
First, explain why he might take an inefficient number ofpills from the classes’ perspective (the 4747 students and John).Why the word “might†rather than “will�
Then consider the following plan: the 4747 students correctlyfigure out how much money is needed to buy the additional pillsthat would be required to get him to the point where he is
consuming pills up to the point where MSB=MSC. Assume the costis $X>0
The students then make voluntary contributions to an Edwardpill-fund, and the money raised is
used to by the extra pills.
Discuss whether this plan is likely to be efficiencyincreasing. Discuss whether it is likely that John will end upconsuming the efficient number of pills from the classes’perspective.
