Essay
You decide to hire a tutor to help prepare for your graduate entrance exam.Your willingness to pay is provided in the following table.
The tutor you hire initially charges $20 per hour, but changes her fee to $30 per hour after learning that more time is needed.
a.At the initial price of $20, what is
i.Consumer surplus
ii.Producer surplus
b.At the price of $30 per hour, how many hours of tutoring will be achieved?
c.At the price of $25, what is
i.Consumer surplus
ii.Producer surplus
d.How does economic surplus compare for both prices? Comment on any difference.
Correct Answer:
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a.
i.$15.$10 for the 1st hour plus $5 for ...
i.$15.$10 for the 1st hour plus $5 for ...
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