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

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.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 what consumers are willing to pay and what they actually pay. If Julie charges $7, which is equal to her marginal cost and presumably equal to the price consumers pay, then the consumer surplus is the area above the price line and below the demand curve up to the quantity sold. Without specific numbers from Table 9.3, we can't calculate the exact value, but the concept suggests consumers are getting some value above what they pay. Since $11 is the only positive value listed, it's the logical choice given the information provided.

Table 93 Julie Plans to Start a Pet-Sitting Service