Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. How many ferry trips would the owner of Restaurant 1 prefer to have?
A)0
B)1
C)2

Question

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip. 
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750 per day and the 4 business owners have agreed to split the costs of the ferry trips equally. How many ferry trips would the owner of Restaurant 1 prefer to have?
A)0 
B)1 
C)2

Quizplus · Accepted Answer

According to the table, Restaurant 1 is willing to pay $300 per day for the ferry service. If all four owners split the cost equally, each owner would need to pay $187.50 per day ($750 divided by 4). This leaves Restaurant 1 with $112.50 ($300 - $187.50) to contribute towards the actual trip cost for each ferry ride. Since the cost to run the ferry for each roundtrip is $750, and Restaurant 1 is willing to contribute $112.50 towards the cost per trip, Restaurant 1 would prefer to have 2 ferry trips per day ($112.50 x 2 = $225, which is less than Restaurant 1's willingness to pay of $300). Therefore, the best choice would be C)2 ferry trips.

Table 11-5 A Small Island Off the Coast of Cape Cod Contains