Question

Tim mows neighborhood lawns for extra money. Suppose that he would be willing to mow one lawn for ​$14​, a second lawn for ​$17​, and a third lawn for ​$24. Also suppose that three neighbors are interested in having their lawns mowed. Mrs. Jones would be willing to pay ​$33 to have her lawn​ mowed, Mr. Wilson would be willing to pay ​$26​, and Ms. Smith would be willing to pay ​$24.
If Tim offers to mow lawns for ​$24 ​each, what will be his producer​ surplus?

Considering Mrs.​ Jones, Mr.​ Wilson, and Ms. Smith​ together, what will be their consumer​ surplus?

Answer 1

14 + 17 + 24 = 55 24 + 24 + 24 = 72 Producer Surplus = $17 Tim makes $17 more than he is initially willing to charge, thus a surplus of 17. 33 + 26 + 24 = 83 24 + 24 + 24 = 72 Consumer Surplus = $11 The customers pay $11 less than they are initially willing to pay, thus a surplus of 11. Everybody wins, yay capitalism