Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. If the price is $800 per copy,
A) both Iris and Daphne will purchase Joss's services and Joss will undertake the job.
B) only Daphne will purchase Joss's services and Joss will undertake the job for her.
C) only Daphne will want to purchase Joss's services but Joss will not be willing to do the work.
D) neither Iris nor Daphne will commission the work.

Question

Quizplus · Accepted Answer

Joss's opportunity cost is $1,200, which is higher than the $800 Daphne is willing to pay, so Joss will not undertake the job. Iris will not purchase because the price is above her willingness to pay.

Joss Is a Marketing Consultant