You have two options for how to spend the afternoon. You can either go see a movie with your roommate or work as a tutor for the Math Department. From experience, you know that going to see a movie gives you $20 worth of enjoyment, and with your student discount, a movie ticket only costs $12. If you spend the afternoon working as a math tutor, you will get paid $45. On a typical day, you wouldn't be willing to spend the afternoon working as a math tutor for less than $35. What is your economic surplus from working as a math tutor instead of going to the movies?
A)$8
B)$2
C)$12
D)$10

Question

Quizplus · Accepted Answer

The benefit of spending the afternoon working as a math tutor is $10 (= $45 - $35). The cost of spending the afternoon working as a math tutor is the $8 (= $20 - $12)in economic surplus you would have received by going to the movies. Thus, your economic surplus from working as a math tutor instead of going to the movies is $2.

You Have Two Options for How to Spend the Afternoon