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 can charge a different price in the morning and in the afternoon, then in the morning, it will rent out ________ bike(s) and charge ________ per bike.
A. 4; $8
B. 1; $22
C. 2; $16
D. 3; $12
Answer: D
You might also like to view...
If supply is perfectly elastic in a consumer goods market, a per unit tax will always be inefficient unless the market demand curve for consumers is perfectly inelastic.
Answer the following statement true (T) or false (F)
How is the market demand curve for a public good derived?
What will be an ideal response?
When demand is perfectly inelastic with respect to price, the demand curve is horizontal
Indicate whether the statement is true or false
If nominal GDP of a country increased and real GDP remained unchanged in a particular year, which of the following is most likely to have taken place?
a. Output increased and the price level increased b. Output increased and the price level decreased c. Output remained constant and the price level increased d. Output decreased and the price level decreased e. Output increased and the price level remained constant