Question

Books R Us sells vintage collectible books. The company is willing to sell particular book for as little as $45. Its main competitor is Hard 2 Find Books, which is willing to sell the book for as little as $30. The current market price of that particular book is $75. What is the total producer surplus for the two firms? Your Answer: Answer Karen can make 4 jackets or 10 ties in one day working at the clothing factory. Joe can make 6 jackets or 23 ties in one day working at the clothing factory. What is Karen's opportunity cost of producing 1 tie? Round your answer to one decimal place. Be sure to enter the correct units for what they are giving up. Your Answer: Answer units

Answer 1

1) 75

(Producer surplus is the differences between the actual price received by the producer and the minimum price charged by the producer for a book .

Market price =75

Books R Us minimum price = 45

Its producer surplus = 75-45 = 30

Hard to find books minimum price =30

Its producer surplus =75-30=45

Combined producer surplus =45+30=75

Total producer surplus for the two firms =75)

2) 0.4 jackets

(Karen can make 4 jackets and 10 ties by working one day .

Karen's opportunity of producing one tie = 4/10 =0.4 jackets

Opportunity cost is the cost of the next best alternative forgone. When Karen chooses to make 1 tie his opportunity cost of making 1 tie is the 0.4 jackets he would have made.)