Suppose Island Bikes, a Profit-Maximizing Firm, Is the Only BikeSuppose Island Bikes Knows That Customers Whose Reservation Prices Are

The Answer of Suppose Island Bikes, a Profit-Maximizing Firm, Is the Only BikeSuppose Island Bikes Knows That Customers Whose Reservation Prices Are

Suppose Island Bikes, a Profit-Maximizing Firm, Is the Only BikeSuppose Island Bikes Knows That Customers Whose Reservation Prices Are

The Answer of Suppose Island Bikes, a Profit-Maximizing Firm, Is the Only BikeSuppose Island Bikes Knows That Customers Whose Reservation Prices Are

Solved

Suppose Island Bikes, a Profit-Maximizing Firm, Is the Only Bike

question 104

Multiple Choice

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.
$\begin{array} { | c | c | } \hline \text { Custamer } & \begin{array} { c } \text { Reservetion Price } \\\text { (\$ /Rental) }\end{array} \\\hline \mathrm { A } & 22 \\\hline \mathrm { B } & 16 \\\hline \mathrm { C } & 12 \\\hline \mathrm { D } & \mathrm { 8 } \\\hline \mathrm { E } & 6 \\\hline \mathrm { F } & 4 \\\hline\end{array}$ Suppose 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.

Explain the characteristics and benefits of a market economy.

Describe the implications of private ownership and free exchange.

Understand the economic rationale for specialization and division of labor.

Analyze the impact of trade on economic output and progress.

Definitions:

Rice Plantation

A large agricultural estate specifically designed for the cultivation of rice, often found in the southern United States before the Civil War, and reliant on enslaved labor.

Harsh Conditions

Refers to environments or situations that are extremely difficult to endure or survive in due to severe weather, lack of resources, or challenging circumstances.

Task Labor System

A labor system, notably used in plantation agriculture, where enslaved people were assigned specific tasks to complete each day, after which they had some degree of autonomy.

West Africa

A region located in the western part of the African continent, comprising 16 countries and noted for its diverse cultures, languages, and economic activities.