Table 16-3

Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 16-3 above shows a portion of her survey results.
-Refer to Table 16-3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour.What is her marginal revenue?
A)It is $7 for the first hour and starts declining thereafter.
B)It is $7 for the first hour and starts increasing thereafter.
C)It is constant at $7.
D)It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third, and $8 for the fourth.

Question

Table 16-3
  
Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 16-3 above shows a portion of her survey results.
-Refer to Table 16-3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7 per hour.What is her marginal revenue?
A)It is $7 for the first hour and starts declining thereafter. 
B)It is $7 for the first hour and starts increasing thereafter. 
C)It is constant at $7. 
D)It coincides with the figures in the table; $12 for the first hour, $10 for the second, $9 for the third, and $8 for the fourth.

Quizplus · Accepted Answer

Marginal revenue is the additional revenue generated by selling one more unit of the product. Since Julie charges $7 per hour and assumes each person only demands one hour of pet sitting services per period, her marginal revenue will be constant at $7 per hour. Therefore, choice C is the correct answer.

Table 16-3 Julie Plans to Start a Pet-Sitting Service. She Surveyed Her