Question

Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour. If the wage rate that Lauren earns is $7 per hour, then the orchard owner's surplus from Lauren's labor is ________ per hour.

Answer 1

Answer:

$1 per hour

Explanation:

Data provided in the question

Lauren pick cherries per hour for $8 per hour

And, the wage rate that Lauren earns is $7 per hour

So, the surplus made from Lauren's labor per hour is

= Lauren pick cherries per hour - Wage rate that Lauren earns

= $8 per hour - $7 per hour

= $1 per hour

Simply we deduct the wage rate from the cherries per hour so that the surplus per hour could come