David tunes pianos in his spare time for extra income. Buyers of his service are willing to pay $135 per tuning. One particular week, David is willing to tune the first piano for $115, the second piano for $125, the third piano for $140, and the fourth piano for $175. Assume David is rational in deciding how many pianos to tune. His producer surplus is

Question

Quizplus · Accepted Answer

David will tune the first two pianos because the cost to him ($115 and $125) is less than what buyers are willing to pay ($135). His producer surplus is the difference between what he receives and his costs: ($135 - $115) + ($135 - $125) = $20 + $10 = $30.

David Tunes Pianos in His Spare Time for Extra Income