Table 9.3 Julie plans to start a pet-sitting service.She surveyed her neighbourhood to determine the demand for this service.Assume that each person surveyed demands only one hour of pet sitting services per period.Table 9.3 above shows a portion of her survey results.
-Refer to Table 9.3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7.How many hours will be purchased and what is her total revenue?

Question

Table 9.3  Julie plans to start a pet-sitting service.She surveyed her neighbourhood to determine the demand for this service.Assume that each person surveyed demands only one hour of pet sitting services per period.Table 9.3 above shows a portion of her survey results.
-Refer to Table 9.3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7.How many hours will be purchased and what is her total revenue?

Quizplus · Accepted Answer

At a price of $7 and a constant marginal cost of $7, Julie will have a supply curve that is a horizontal line at a quantity of 4 hours. Looking at the demand curve in the table, we can see that 4 hours will be purchased at a price of $7, generating total revenue of $28. Any higher price would result in less demand and less revenue, and any lower price would result in more demand but lower revenue due to the fixed supply. Therefore, the best choice is B.

Table 93 Julie Plans to Start a Pet-Sitting Service