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

Question

Business

Aspen Edwards

8 August, 03:47

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

+3

Answers (1)

Know the Answer?

Camilla Sheppard · Answer 1

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.