Table 11-5 A Small Island Off the Coast of Cape Cod Contains

question 58

Multiple Choice

Table 11-5
A small island off the coast of Cape Cod contains two restaurants and two retail stores. Tourists need to take a ferry boat to reach the island, but with a recent slowdown in the economy, tourists are less willing to pay for the boat ride to visit the island. The owners of the restaurants and stores on the island - Restaurants 1 and 2, and Stores A and B - think that if tourists could ride the ferry for free, they would be happy to visit the island, eat and shop. The business owners are considering contributing to a pool of money that will be used to pay for roundtrip ferry service each day. The table represents their willingness to pay, that is, the maximum amount that each business owner is willing to contribute, per day, to pay for each ferry trip.
-Refer to Table 11-5. Suppose the cost to run the ferry for each roundtrip is $750. Then total surplus for the 4 business owners is

• A)$750 if there is 1 ferry trip.
• B)$40 if there are 2 ferry trips.
• C)$150 if there are 3 ferry trips.
• D)-$400 if there are 4 ferry trips.

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Definitions:

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A quality that enables users to identify similarities and differences between two or more items of financial information.

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