A group of four friends decided to stay together by contributing money towards the rent of a house. The rent was Rs.2000 per month.

a. How could this be shared among them?

b. We also know that two of them earned Rs.3000 per month and the other two Rs.7000 per month. Is there some other way of sharing the cost so that each one of them feels the same pinch?

c. Which way of sharing would you prefer and why?

a. Since they are a group of four friends and the total rent comes to about 2000, they can divide the total rent in such a way that each person equally contributes to the whole amount, i.e. 2000/4 = 500 each. This division will make sure that the burden of the rent is shared equally by everyone.

b. Since two among the four are earning more, they have the capability to contribute more amount for the rent. Thus the whole rent amount can be divided in such a way that the ratio between the marginal cost of paying rent and their income is equal for everyone, i.e. cost of paying rent by A/income = cost of paying rent by B/income = cost of paying rent by C/income = cost of paying rent by D/income.

c. I would prefer the second method of rent bifurcation. The first method though leads to each person paying the same amount of rent is less efficient compared to the second where each person pays according to their ability to pay. Thus this would be the preferred strategy for the division of rent.