am i right?
Assume that Carol cleans Dawn's house weekly for $80. Dawn would be willing to pay as much as $100 weekly to have his house cleaned. Carol’s opportunity cost is $70.
If Carol cleans Dawn's house, the producer surplus is
1. $80.
2. $70.
3. $100.
4. $10.
5. None of the answers is correct.
Answer 5. Am i right? so confused
To determine the producer surplus, we need to calculate the difference between the price the producer receives and the opportunity cost.
In this scenario, Carol is the producer and her opportunity cost is $70. She charges Dawn $80 to clean his house, which is greater than her opportunity cost. Therefore, the producer surplus is the difference between her payment and her opportunity cost, which is $80 - $70 = $10.
So, the correct answer is 4. $10.