Question

Tom walks bethany's dog once a day for $50 per week. bethany values this service at $60 per week, while the opportunity cost of tom's time is $30 per week. the government places a tax of $35 per week on dog walkers. before the tax, what is the total surplus?

a. $30

b. $25

c. $60

d. $50

Answer 1

The total surplus is A. $30.

The surplus is the amount of money that is let over after all requirements have been met/paid. This can also be an excess amount of production that is over the amount of money demanded. The opportunity cost is $30, which is what Tom values his time being worth that he is not getting due to dog walking.