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?

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21-10-2022
Business

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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?

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qwstar qwstar · Answer 1 · 2022-10-24T14:39:39-04:00

The producer surplus earned by Miranda will be $10, and Jason will earn $0.

Producer surplus is the total profit an individual producer makes when they produce and sell a specific quantity of a good at market value. The total revenue from sales of a producer's goods less the marginal cost of production is the producer surplus.

The profit a producer makes by selling at market value as opposed to the lowest price they would have been ready to accept is known as the producer's surplus.

Miranda offered to tutor for $20, but the market rate for tutoring was $30; as a result, Miranda's producer surplus is equal to $30 - $20, or $10. Jason, on the other hand, offered to tutor for more than the market rate, leaving him with a $0 producer surplus.

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