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

question 120

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 what price will it charge?

• A)$4
• B)$8
• C)$12
• D)$16