The Accompanying Table Summarizes Six Potential Customers' Willingness to Pay

question 78

Multiple Choice

The accompanying table summarizes six potential customers' willingness to pay for a solo skydiving experience from SkyMasters, Inc. The aircraft has room for eight people, including the pilot and skydiving instructor. The marginal cost of adding each additional passenger is $100. Use this information to answer the questions. $\begin{array}{ll}\text { Customer }&\text { Maximum Wilingness to Pay }\\\text { Harold } & \$ 400 \\\text { Leslie } & \$ 350 \\\text { Jay } & \$ 300 \\\text { Kisten } & \$ 250 \\\text { Ivana } & \$ 200 \\\text { Matt } & \$ 150\end{array}$
-Assume that SkyMasters, Inc. follows the profit-maximizing rule and the company charges a single price for skydiving. Calculate the company's profit.

• A) $1,050
• B) $1,000
• C) $700
• D) $600
• E) $550

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Definitions:

Contribution Margin Ratio

A financial metric that shows the portion of sales revenue that is not consumed by variable costs and is available to cover fixed costs.

Net Income

The earnings of a company after taking into account all expenses, including operational costs, interest, and taxes, subtracted from its total revenue.

Additional Advertising

Additional Advertising denotes the increased efforts or expenditures in promotional activities aimed at boosting sales or awareness beyond the initial or planned scope.

Scatter Diagram

A graphical representation that displays the relationship between two variables, typically to identify correlation patterns.