Billy Mac Tailor drives an eighteen-wheeler CG Carriers. He always stops at All Bright truck stops to by diesel fuel. He is a preferred customer and gets a free meal and shower worth $10.00. But All Bright charges $12.00 more for a fill up than most competitors. Which of the following is true?
A) CG Carriers gets a benefit of $22.00 because Tailor is a preferred customer.
B) CG Carriers has a wealth reduction of $2.00 even though they do not know about Tailor's actions.
C) There is a wealth transfer to Billy Mac Tailor and CG Carriers has a wealth reduction of $12.00 .
D) Billy Mac Tailor increases his income by $10.00 and CG Carriers also benefits.

Question

Quizplus · Accepted Answer

By being a preferred customer, Billy Mac Tailor benefits from a free meal and shower worth $10.00. However, CG Carriers incurs a cost of $12.00 more for each fill up compared to most competitors. This results in a wealth transfer from CG Carriers to Billy Mac Tailor, with CG Carriers experiencing a wealth reduction of $12.00.

Billy Mac Tailor Drives an Eighteen-Wheeler CG Carriers