Scenario 8-2
Tom mows Stephanie's lawn for $25. Tom's opportunity cost of mowing Stephanie's lawn is $20, and Stephanie's willingness to pay Tom to mow her lawn is $28.
-Refer to Scenario 8-2.Tom's producer surplus as a result of mowing Stephanie's lawn is
A)$2.
B)$3.
C)$5.
D)$25.

Question

Quizplus · Accepted Answer

Tom's producer surplus is the difference between his willingness to accept (opportunity cost) and the amount he received (price he charged). In this case, Tom's producer surplus is $5 ($25 - $20).

Scenario 8-2 Tom Mows Stephanie's Lawn for $25. Tom's Opportunity Cost of Cost