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 decides to charge each customer according to his or her willingness to pay.What is Julie's total revenue and how many hours of service will be purchased?

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 decides to charge each customer according to his or her willingness to pay.What is Julie's total revenue and how many hours of service will be purchased?

Quizplus · Accepted Answer

Julie's marginal cost is constant at $7, so she will charge each customer according to his or her willingness to pay. The highest price that a customer is willing to pay is $10, so Julie will charge each customer $10. There are 4 customers who are willing to pay $10, so Julie's total revenue will be $40.

Table 93 Julie Plans to Start a Pet-Sitting Service