Fiona has a monopoly on motorboat rentals on Nantucket Island during the summer. She can rent five boats per week at $11,000 each. If she wants to rent six, she can charge only $10,000 each. The quantity effect of renting the sixth motorboat is:

Question

Quizplus · Accepted Answer

The quantity effect is the additional revenue gained from selling one more unit. In this case, renting the sixth motorboat would bring in an additional $10,000 ($11,000 for the first five boats and $10,000 for the sixth boat). Therefore, the best choice is to rent only five boats at $11,000 each, as that would bring in a total revenue of $55,000.

Fiona Has a Monopoly on Motorboat Rentals on Nantucket Island