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23 March, 14:32

Miranda and Jason are in the tutoring business. Miranda is willing to tutor as long as she gets $20, while Jason will not tutor unless he gets $35. If the most that someone would pay for tutoring is $30, how much producer surplus is earned? a) Miranda = $10; Jason = - $5b) Miranda = $20; Jason = - $5c) Miranda = $10; Jason = $0d) Miranda = $20; Jason = $0

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  1. 23 March, 15:01
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    C

    Explanation:

    Producer's surplus is the gain a producer gain by selling at market price instead of selling at the smallest price the producer was willing to sell.

    Miranda was willing to tutor at $ 20 but the market price of tutoring was $ 30 therefore her producer surplus = 30 - 20 = $ 10 while for Jason the price he was willing to tutor was more than the market price and therefore he therefore has $ 0 producer surplus.
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