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.What is the value of the consumer surplus enjoyed by her customers?
A)$39
B)$28
C)$11
D)$0

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.What is the value of the consumer surplus enjoyed by her customers?
A)$39 
B)$28 
C)$11 
D)$0

Quizplus · Accepted Answer

Consumer surplus is the difference between the price consumers are willing to pay for a good and the price they actually pay. In this case, consumers are willing to pay up to $18 for the service (as shown in the table), but they only have to pay $7. Therefore, the consumer surplus is $18 - $7 = $11.

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