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2 months ago
Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. Which of the following statements is true?

• Joss should charge each customer $600; that way he will earn his opportunity cost and it will be fair to both Iris and Daphne.

• Joss should charge Iris $500 and Daphne no more than $700; that way he earns his opportunity cost and there is no loss in economic surplus.

• Joss should charge Iris $500 and Daphne $800; that way economic surplus is maximized.

• Joss should charge Iris $500 but charging Daphne $800 is unfair because it allows Joss to earn more than his opportunity cost.
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Microeconomics
Edition: 7th
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2 months ago
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Joss should charge Iris $500 and Daphne $800; that way economic surplus is maximized.
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