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 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?
A)4 hours and her total revenue = $39
B)4 hours and her total revenue = $28
C)1 hour and her total revenue = $7
D)5 hours and her total revenue = $35

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 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?
A)4 hours and her total revenue = $39 
B)4 hours and her total revenue = $28 
C)1 hour and her total revenue = $7 
D)5 hours and her total revenue = $35

Quizplus · Accepted Answer

Julie's total revenue is $39 (4 hours x $7 marginal cost + $11 consumer surplus) and 4 hours of service will be purchased.

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