Suppose Island Bikes, a profit-maximizing firm, is the only bike rental company in a small resort town. The marginal cost to Island Bikes of renting out a bike is $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservations prices are listed in the table. CustomerReservation Price($/Rental)A22B16C12D8E6F4Suppose Island Bikes knows that customers whose reservation prices are at least $10 always rent bikes before noon, while those whose reservation prices are below $10 never do so. If Island Bikes charges a different price in the morning and in the afternoon, then what will be the total economic surplus?
A. $9
B. $3
C. $41
D. $49
Answer: D
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A hypothetical open economy has a marginal propensity to import (MPI) equal to 0.2 and a marginal propensity to consume equal to 0.7. Assume that the economy is initially in equilibrium. Refer to Scenario 10.2. What is the marginal propensity to save of this economy?
a. 0.2 b. 0.3 c. 0.7 d. 0.9 e. 0.6
We can expect producers to pay:
A. None of these statements is true. B. more for land with lower productivity. C. less for land with higher productivity. D. less for land with lower productivity.
When indifference curves have ________ marginal rates of substitution, any interior choice that satisfies the tangency condition is the best affordable choice.
A. constant B. increasing C. declining D. positive
The ability of the DVCs to use the technologies of the IACs is somewhat limited because:
A. the IACs have patents on most of their technologies. B. the IACs and the DVCs have much different resource endowments. C. the technologies of the IACs rely heavily on unskilled labor. D. IAC technologies are labor-intensive, while DVC technologies are capital-intensive.