Suppose you're willing to tutor a student for $10 an hour. The student pays you $15 an hour. What is your producer surplus?

Question

Quizplus · Accepted Answer

Producer surplus is the difference between the revenue earned by the producer and the cost of producing the good or service. In this case, the cost of producing the service (tutoring) is $10 an hour, while the revenue earned is $15 an hour. Therefore, the producer surplus is $15 - $10 = $5 an hour.

Suppose You're Willing to Tutor a Student for $10 an Hour