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 each customer according to his or her willingness to pay instead of a uniform price of $7.Which of the following statements is true?
A)Julie is worse off because the demand for her services is reduced.
B)Julie has converted the consumer surplus (from a uniform price)into economic profit.
C)Julie's customers are better off because their consumer surplus has increased.
D)Julie's has converted the producer surplus (from a uniform price)into consumer surplus.

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 each customer according to his or her willingness to pay instead of a uniform price of $7.Which of the following statements is true?
A)Julie is worse off because the demand for her services is reduced. 
B)Julie has converted the consumer surplus (from a uniform price)into economic profit. 
C)Julie's customers are better off because their consumer surplus has increased. 
D)Julie's has converted the producer surplus (from a uniform price)into consumer surplus.

Quizplus · Accepted Answer

Julie is able to capture the entire consumer surplus as economic profit by charging each customer their maximum willingness to pay.

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