Table 16-3

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 16-3 above shows a portion of her survey results.
-Refer to Table 16-3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7.How many hours will be purchased and what is her total revenue?
A)5 hours; total revenue = $35
B)4 hours; total revenue = $28
C)3 hours; total revenue = $21
D)2 hours; total revenue = $14

Question

Table 16-3
  
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 16-3 above shows a portion of her survey results.
-Refer to Table 16-3.Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7.How many hours will be purchased and what is her total revenue?
A)5 hours; total revenue = $35 
B)4 hours; total revenue = $28 
C)3 hours; total revenue = $21 
D)2 hours; total revenue = $14

Quizplus · Accepted Answer

Since Julie's marginal cost is constant at $7 and she charges $7, the quantity demanded will be equal to the quantity supplied at this price. In Table 16-3, we can see that there are 4 people who demand 1 hour of pet sitting services each. Therefore, Julie will provide 4 hours of pet sitting services and her total revenue will be 4 x $7 = $28. Therefore, the correct answer is B.

Table 16-3 Julie Plans to Start a Pet-Sitting Service. She Surveyed Her