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

question 11

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 below. $$\begin{array} { | c | c | } \hline \text { Customer } & \begin{array} { c } \text { Reservation Price } \\( \$ \text { Rental } ) \end{array} \\\hline \mathrm { A } & 22 \\\hline \mathrm { B } & 16 \\\hline \mathrm { C } & 12 \\\hline \mathrm { D } & 8 \\\hline \mathrm { E } & 6 \\\hline \mathrm { F } & 4 \\\hline\end{array}$$ If Island Bikes charges a single price to all of its customers, then how many bikes will it rent out each day?

• A)6
• B)5
• C)4
• D)3

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