Question

0 John is a tutor for a university, making $300. The university raises the pay to $400. Given the increase, Emily decides to tutor now. By how much has producer surplus risen?

Answer 1

Between 100 and $200

Step-by-step explanation:

As we know that

Producer surplus = Market price-The actual selling rate for the products

Given information

John made as a tutor = $300

University raise it to $400

So based on this, there are various conditions like

1. John is earning $100 more as a tutor

2. If Emily enters, then the producer surplus is between $0 and $100

This price would not more than $100 because if the price is more than she has to start the tutoring when the price is $300

So overall it would lie in between $100 and $200