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29 December, 18:59

Suppose Marco is willing to tutor for $15 an hour. On Tuesday, he will tutor Kelly for 1 hour and Mike for 3 hours. Kelly will pay $30 an hour, but Mike will only pay $20 an hour, since he has a longer tutoring session. How much producer surplus will Marco gain from tutoring both Kelly and Mike?

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  1. 29 December, 19:09
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    Total producer surplus = $30

    Explanation:

    Producer surplus is the difference between the price a seller is willing to sell and the market price or actual price at which the item is bought. The producer surplus is the additional benefit the seller gets from a sale.

    Consumer surplus = Market price - Price seller is willing to sell for

    Marco is willing to sell at $15 hour

    Kelly is willing to pay $30 per hour

    Mike is willing to pay $20 per hour

    Surplus from Kelly = 30 - 15 = $15

    Surplus from Mike = 20 - 15 = $5

    Total producer surplus = ($15*1 hour) + ($5 * 3 hours)

    Total producer surplus = 15 + 15 = $30
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Home » Business » Suppose Marco is willing to tutor for $15 an hour. On Tuesday, he will tutor Kelly for 1 hour and Mike for 3 hours. Kelly will pay $30 an hour, but Mike will only pay $20 an hour, since he has a longer tutoring session.
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