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

$20

Step-by-step explanation:

The computation of the producer surplus is shown below:

Producer surplus = Market price - Actual amount to sell the goods or minimum price

where,

Market price = $135

Minimum price or actual amount to sell the goods = $115

So, the producer surplus is

= $135 - $115

= $20

And the other information which is given in the question is not relevant. Hence, ignored it