You are thinking of starting a tutoring service. You already have a part-time job on campus that pays $10 per hour. You think you can tutor fellow students for five hours each Saturday at $25 per hour. If you were not tutoring, you could work another five hours at your campus job. How much economic surplus will you generate each week if you start tutoring?
A)$125
B)$75
C)$65
D)$50

Question

Quizplus · Accepted Answer

If you choose to tutor, you will earn $25 per hour for 5 hours, totaling $125. However, if you didn't tutor, you could work your campus job for 5 hours at $10 per hour, earning $50. The economic surplus from tutoring is the extra income over what you would earn at your campus job, which is $125 - $50 = $75.

You Are Thinking of Starting a Tutoring Service