Question

Max and Maddy charge people to park on their lawn while attending a nearby craft fair. At the current price of $10, seven people park on their lawn. If they raise the price to $15, they know that only five people will want to park on their lawn. Whether they have seven or five cars parked on their lawn does not affect their costs. From this information it follows that:
A- they should leave the price at $10. B- it does not matter if they charge $10 or $15. C- they would do better charging $15 than $10. D- they should raise the price even more.

Answer 1

From this given information it follows that they would do better charging $15.

Answer: Option C

Explanation:

Taking the given situation into consideration, when seven people park their vehicles at ten dollars each, the total revenue incurred is seventy dollars. When the price is hiked to fifteen dollars, there might be a reduction in the number of people parking their vehicles.

But there will not be a reduction in the revenue incurred. Because in the second situation, the revenue incurred is seventy five dollars, which is obviously more than the previous situation.