JNU SSS 2019 - Question 29 (Solution)

Erin would be willing to pay as much as $ \$100$ per week to have her house cleaned. Ernesto's opportunity cost of cleaning Erin's house is $ \$70$ per week. If Ernesto Cleans Erin's house for $ \$80$, Ernesto's producer surplus is:
Given,
Erin's maximum willingness to pay is $ \$100$ per week.
Ernesto's opportunity cost is $ \$70$ per week
Ernesto cleans Erin's house for $ \$80$ per week (market price)
Here, Erin is the consumer and Ernesto be the producer. The producer's surplus of Ernesto is given by,
$$Producer \ surlpus= Market \ price - \ Opportunity \ cost \\ =\$80 - \$70=\$10$$

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