Question

Welfare and efficiency end of the chapter problem: Consider the national market for in-home childcare, depicted in the accompanying graph. At 8 million hours, what is the size of the total economic surplus?

a) Dependent on demand shifts
b) Impossible to determine
c) Over 150 million dollars
d) Needs additional data to ascertain

Answer 1

It is impossible to determine the total economic surplus in the national market for in-home childcare without additional data, especially the demand and supply curves.

Step-by-step explanation:

The question pertains to the national market for in-home childcare and requires determining the total economic surplus at 8 million hours of service. To answer this, we need specific data, such as the demand and supply curves for the market, to accurately calculate the consumer and producer surplus and hence the total economic surplus. Without this data or the accompanying graph being referred to, it is impossible to determine the total economic surplus; therefore the correct answer to the question would be (b) Impossible to determine.