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.If Stephanie hires Tom to mow her lawn,Tom's producer surplus is

Question

Quizplus · Accepted Answer

Tom's producer surplus is the difference between what he receives for mowing the lawn ($25) and his opportunity cost of mowing the lawn ($20), which is $5 in this case. Therefore, if Stephanie hires Tom to mow her lawn, Tom's producer surplus is $5.

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