Julie Plans to Start a Pet-Sitting Service

Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 15-6 above shows a portion of her survey results.
-Refer to Table 15-6. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges each customer according to his or her willingness to pay instead of a uniform price of $7. Which of the following statements is true?

A) Julie is worse off because the demand for her services is reduced.
B) Julie has converted the consumer surplus (from a uniform price) into economic profit.
C) Julie's customers are better off because their consumer surplus has increased.
D) Julie's has converted the producer surplus (from a uniform price) into consumer surplus.

Correct Answer:

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