Question

David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is ________.

Answer 1

total producer surplus is $30

Step-by-step explanation:

given data

pay = $135 per tuning

first piano = $115

second piano = $125

third piano = $140

fourth piano = $175

solution

we know here producer surplus earned from the piano is

producer surplus earned from the 1st piano = $135 - $115

producer surplus earned from the 1st piano = $20 .................1

and

producer surplus earned from the 2nd piano is = $135 - $125

producer surplus earned from the 2nd piano = $10 ......................2

and

For the 3rd and 4th piano, David’s willingness to tune is greater than the buyers’ willingness to pay

so

he cannot tune 3rd and 4th piano

so

David total producer surplus from equation 1 and 2 is

total producer surplus is = $20 + $10

total producer surplus is $30