Question

#4. Four roommates are going their separate ways after graduation and wish to divide up their jointly owned furniture (equal shares) and the moving chores by the method of sealed bids Their bids (in dollars) on the items are shown in the following table.

	Audrey	Billy	Carl	David
Stereo	300	250	200	280
Couch	200	350	300	100
Table	250	200	240	80
Desk	150	150	200	220
Cleaning the rugs	- 80	- 70	- 100	- 60
Patching nails holes	- 60	- 30	- 60	- 40
Repairing the window	- 60	- 50	- 80	- 80

a. What is each roommate’s estimate of what should be his fair?

b. What item(s) does each player receive and what jobs does each player perform?

c. How much does each player pay or receive?

d. How much surplus cash is there?

e. What is the final outcome?

Answer 1

PARTICULAR	AUDRY	BILLY	CARL	DAVID
STEREO	300	250	200	280
COUCH	200	350	300	100
TABLE	250	200	240	80
DESK	150	150	200	220
CLEANING OF RUGS	-80	-70	-100	-60
PATCHING OF NAIL HOLES	-60	-30	-60	-40
REPAIRING OF WINDOWS	-60	-50	-80	-80
TOTAL	700	800	700	500
FAIR VALUE	700/4	800/4	700/4	500/4
	175	200	175	125
ITEMS EACH PLAYER RECEIVE :
STEREO	300
COUCH		350
TABLE	250
DESK				220
CLEANING OF RUGS			-100
PATCHING OF NAILS	-60/2		-60/2
REPAIRING OF WINDOWS			-80/2	-80/2
	695	550	5	305
AMT EACH PLAYER PAYS	695-175	550-200	5-175*	305-125
	520	350	0	180

FAIR VALUE OF ESTATE = $695+$550+$5+$305= $1555

TOTAL AMOUNT RECEIVED = 520$+350$+180$ = 1050$

SURPLUS = 505$/4 = 126.25$

AMOUNT PAID BY A: 520-126.25 = $ 393.75

AMOUNT PAID BY B: 350-126.25 = $ 223.75

AMOUNT RECEIVED BY C: 170**-126.25 = $ 43.75

AMOUNT PAID BY D: 180-126.25 = $ 53.75

** AMT RECD BY C 170-5 = 170$