David tunes pianos in his spare time for extra income.Buyers of his service are willing to pay $150 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

Question

Quizplus · Accepted Answer

Producer surplus is the difference between what producers are willing to accept and what they actually receive. For the first three pianos, David's willingness to accept is less than $150, resulting in a surplus of $35 ($150-$115), $25 ($150-$125), and $10 ($150-$140) respectively. The fourth piano would not be tuned as his willingness to accept ($175) is more than $150. Thus, the total producer surplus is $35 + $25 + $10 = $70.

David Tunes Pianos in His Spare Time for Extra Income