Suppose your company runs a shuttle business of a hotel to and from the local airport. the costs for different customer loads are: 1 customer: $30 2 customers: $32 3 customers: $35 4 customers: $38 5 customers: $42 6 customers: $48 7 customers: $57 8 customers: $68. 1. what are your marginal costs for each customer load level? (chart) 2. if you are compensated $10 per ride, what customer load would you choose? (essay)

The ideal customer load is 7 customers.

Further Explanation:

Marginal revenue:

Marginal revenue is the increase in the revenue of the product with the sale of one additional unit. It is an important management tool as it helps the management to identify the revenue at different levels of sales. The management uses the data to set the standards for future sales. It is calculated by dividing the increase in revenue with the increase in the sold units.

Selection of the most desirable customer load:

Calculate the total revenue by multiplying the per ride sales price with the number of the customer. After this, the profit/loss should be calculated by subtracting the total revenue from the total cost. The alternate with the highest level of profit should be preferred.

The company is earning the highest level of profit at the customer load of 7 customers, which is $13.  

Thus, the ideal customer load is 7 customers.

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Answer Details:

Grade: Middle school

Chapter: Marginal utility

Subject: Economics

Keywords: Suppose, company, runs, shuttle, business, hotel, from, local, airport, the costs, different, customer, loads, customer, customers.

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