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Allen tutors in his spare time for extra income. Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor. On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40. Assume Allen is rational in deciding how many hours to tutor. His producer surplus is ________ .

Respuesta :

The producer surplus is 64.

Important information:

Buyers of his service are willing to pay $40 per hour for as many hours Allen is willing to tutor.

On a particular day, he is willing to tutor the first hour for $10, the second hour for $18, the third hour for $28, and the fourth hour for $40.

The calculation of producer surplus:

= (40 - 10)  +(40-18) + (40 - 28) + (40 - 40)

= 30 + 22 + 12 + 10

= 64

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