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10 October, 21:18

Mary Jane is willing to babysit for $6 an hour. Her neighbor has asked her to babysit for $8 an hour. Assuming Mary Jane accepts the offer

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  1. 10 October, 21:42
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    The correct answer is B) Her economic rent will be $2/hour

    If Mary Jane accepts the offer to baby sit at $8, she will be earning $2 more than what she was willing to do.

    Economic rent is described as the 'Extra amount' earned by a resource without any extra work/input.

    While the term economic rent can be applied to all kinds of resources e. g. land, capital, in this case, we will be looking at the labor costs.

    All other options are incorrect. For example, option A is incorrect 'Consumer Surplus' cannot be applied to a vendor or something providing services, but is a term used for the consumer.

    Similarly, option D is also incorrect, since her accounting profit will NOT be $8
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