Question

avid walks Carolyn’s dog once a day for $50 per week. Carolyn values this service at $60 per week, while the opportunity cost of David’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. $25 b. $50 c. $60 d. $30

Answer 1

Answer: d. $30

Step-by-step explanation:

Surplus available to Carolyn before tax

= $60-$50 = $10

Surplus available to Avid before tax

= $50-$30 = $20

Total surplus available before tax

= $20 + $10 =$30

This is due to no dog walking taking place.