Table 16-1
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 16-1 below shows a portion of her survey results.
-Refer to Table 16-1.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7.Which of the following statements is true?
A)Julie is worse off because the demand for her services is reduced.
B)Julie has converted the consumer surplus (from a uniform price)into economic profit.
C)Julie's customers are better off because their consumer surplus has increased.
D)Julie's has converted the producer surplus (from a uniform price)into consumer surplus.

Question

Table 16-1
  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 16-1 below shows a portion of her survey results.
-Refer to Table 16-1.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7.Which of the following statements is true?
A)Julie is worse off because the demand for her services is reduced. 
B)Julie has converted the consumer surplus (from a uniform price)into economic profit. 
C)Julie's customers are better off because their consumer surplus has increased. 
D)Julie's has converted the producer surplus (from a uniform price)into consumer surplus.

Quizplus · Accepted Answer

Julie captures the consumer surplus by charging each customer their maximum willingness to pay, thus increasing her economic profit.

Table 16-1 Julie Plans to Start a Pet-Sitting Service.She Surveyed