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Ahmed is willing to mow lawns for $10 each, Boris is willing to mow lawns for $20 each, and Chelsea is willing to mow lawns for $30 each. If the going rate for lawn mowing is $18, what is the total producer surplus received by the three of them?1 point$80-$6$38

Question

Ahmed is willing to mow lawns for 10each,Borisiswillingtomowlawnsfor10 each, Boris is willing to mow lawns for 20 each, and Chelsea is willing to mow lawns for 30each.Ifthegoingrateforlawnmowingis30 each. If the going rate for lawn mowing is 18, what is the total producer surplus received by the three of them?1 point8080-6$38

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Solution

Producer surplus is the difference between the price a producer is willing to accept for a good or service and the actual price they receive.

  1. Ahmed is willing to mow lawns for 10each,butthegoingrateis10 each, but the going rate is 18. So, his producer surplus is 1818 - 10 = $8.

  2. Boris is willing to mow lawns for 20each,butthegoingrateis20 each, but the going rate is 18. Since Boris's minimum acceptable price is higher than the market price, he will not participate in the market, and his producer surplus is $0.

  3. Chelsea is willing to mow lawns for 30each,butthegoingrateis30 each, but the going rate is 18. Like Boris, Chelsea's minimum acceptable price is higher than the market price, so she will not participate in the market, and her producer surplus is also $0.

So, the total producer surplus received by the three of them is 8+8 + 0 + 0=0 = 8.

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