Question

1. Chapter ma2pe08r, Section .72, Problem 012 (ID: 012.07.2 - MC - MANK08) David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is a. $-15. b. $20. c. $30. d. $75.

Answer 1

Answer:

Option C. $30

Step-by-step explanation:

As per question buyers are willing to pay $135 per tuning. If David demands more than this amount producer will not choose David to tune.

As we can see on first week David is willing to tune the first piano for $115,

So surplus for producer will be

135 - 115 = $20

Surplus for second week for producer will be

135 - 125 = $10

Since David is willing to tune the third and fourth piano for $140 and $175 then the producer will not choose David for tuning.

Therefore, total surplus for the producer will be $20 + $10 = $30

Option C. $30 is the correct option.