Question

Question 12 Homework . Unanswered • Due in 14 hours Fill in the Blanks Tim mows neighborhood lawns for extra money. Suppose that he would be willing to mow one lawn for $12, a second lawn for $17, and a third lawn for $23. Also suppose that three neighbors are interested in having their lawns mowed. Mrs. Jones would be willing to pay $35 to have her lawn mowed, Mr. Wilson would be willing to pay $28, and Ms. Smith would be willing to pay $23. Do not include the dollar-sign ($) in your answer. If Tim offers to mow lawns for $23 each, what will be his producer surplus? $ Considering Mrs. Jones, Mr. Wilson, and Ms. Smith together, what will be their consumer surplus? $ Cannot be empty Unanswered Submit R a ppropriate for... League of Lege... Top Hat - Googl... Review Test - W... A a 22:38 2019/11/3

Answer 1

Answer : 1) For producer surplus the minimum receivable payment is $12. But the actual receivable payment is $23. Here the quantity level is 3 lawns. So,

Producer surplus (P.S.) = 0.5 * Height * Base = 0.5 * (23 - 12) * 3 = $16.5

Therefore, here the producer surplus is $16.5 .

2) For consumer surplus the maximum willingness to pay is $35. But the actual payment is $23. Here the quantity level is 3 lawns. So,

Consumer surplus (C.S.) = 0.5 * Height * Base = 0.5 * (35 - 23) * 3 = $18

Therefore, here the consumer surplus is $18.