10/take Question 21 1 pts Refer to the following table. Imagine there an of ice
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10/take Question 21 1 pts Refer to the following table. Imagine there an of ice cream sandwiches for both. Use this information to answer the following questions Maximum Willingness to Pay (MWP) for lce Cream Sandwiches City A Aladdin Alan Alvin Albert Albus MWP CityR $16 $12 Ramon $10 Robert $8 Roger MWP $15 $14 $13 $11 $4 Richard $6 Note: Unit cost is $7 for each ice cream sandwich Reginald It is very hot today, and the ice cream sandwiches melt quickly after Chanel takes them out of the cooler. This gives her the advantage of being able to sell each ice cream at a different price for each person in both cities. How many ice cream sandwiches would Chanel sell in both cities? 0 10 07 FB F7 F6Explanation / Answer
Unit cost is $7 for each ice cream sandwich. It implies marginal cost.
And marginal willingness to pay for each ice cream by each consumer is given in the question table.
NOW, the seller sell the ice cream sandwich only to those consumers who have MWP > MC or MWP=MC.
In city A : the seller sells ice cream sandwich to only 4 customers. Because Albus has the MWP=6 <MC. Therefore, seller won't sell ice cream sandwich to him.
In city B : the seller sells ice cream sandwich to only 4 customers because the Reginald has the MWP= 4 <MC. Therefore the seller won't sell ice cream sandwich to Reginald in city B.
So in total the seller sell (4 in city A + 4 in city B) = 8 ice-cream sandwiches.
Hence option (B) is correct.
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