Question

Table 7-12 ne numbers reveal the opportunity costs of providing 10 piano lessons of equal quality, Cost Seller Marcia $200 Jan $250 Cindy $350 Greg $400 Peter 5700 Bobby $800 Refer to Table 7-12. The equilibrium market price for 10 piano lessons is $300. What is the total producer surplus in the market? a. 550 b. S150 c.$1,050 d. $1,500

Answer 1

Ansi As we know for a particular activity to take place, the benefit from that activity must be greater than the opportunity cost of that activity. So, only Marcia and Jan will give the piano lessons an their opportunity cost is less than the equilibrium market price. Mancia's Jan's Sumplun = Sumplus = 300 - 200 =100 300-250 =50 Total So, producen surplus = loot so = $150. right option is option (b).