Apu Nahasapeemapetilon opens an outdoor iced cappuccino stand in order to sell coffee to neighbours. Apu's product is unique enough that he has some choice about what price to charge. Based the information above, which statement is true?

Question

Quizplus · Accepted Answer

If Apu sells no iced cappuccinos, it must mean that the price he is charging is too high for his potential customers, which means his price must be greater than the marginal benefit of any of his customers. Therefore, D is the correct answer. A is incorrect because stealing does not make it a market, as stealing is not a transaction where both parties (the buyer and the seller) benefit. B is incorrect because the price should cover both the cost of making the iced cappuccinos and the cost of Apu's time, otherwise he would not be making a profit. C is also incorrect because his price must be greater than the marginal benefit of any of his customers, not less. Lastly, E is irrelevant and incorrect as the location of the stand does not necessarily affect whether it is a market or not.

Apu Nahasapeemapetilon Opens an Outdoor Iced Cappuccino Stand in Order