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 $3, and Island Bikes has no fixed costs. Each day Island Bikes has six potential customers, whose reservation prices are listed in the table. CustomerReservation Price($/Rental)A22B16C12D8E6F4What is the socially optimal number of bikes for Island Bikes to rent out each day?
A. 5
B. 3
C. 6
D. 4
Answer: C
You might also like to view...
Firms in different countries that face different input prices may produce the same good using different combinations of inputs, even though they have access to the same technology
Indicate whether the statement is true or false
OPEC has coordinated a reduction in supply that was
a. effective in insulating the members from the decrease in demand in the late 2000s. b. more profitable in the long run than in the short run. c. profitable in both the short run and the long run. d. more profitable in the short run than in the long run.
When a country or a region of a country specializes in producing the product that has the lower opportunity cost compared to another country or region, it is practicing
A. cost disadvantage. B. regional advantage. C. comparative advantage. D. absolute advantage.
Long-run economic profits would most likely exist in which market structure?
A) monopoly, monopolistic competition, and oligopoly B) monopoly and oligopoly C) monopoly and monopolistic competition D) monopoly only