Question

Ronnie operates a lawn-care service. On each day, the cost of mowing the first lawn is $10; the cost of mowing the second lawn is $12; and the cost of mowing the third lawn is $15. His producer surplus on the first three lawns of the day is $53. If Ronnie charges all customers the same price for lawn mowing, that price is ____.
(A) $25
(B) $30
(C) $36
(D) $45

Answer 1

Answer:

(B) $30

Explanation:

We know that,

Producer surplus = Amount paid by the seller - cost of three lawns

$53 = Amount paid by the seller - ($10+ $12 + $15)

$53 =  Amount paid by the seller - 37

So, the total  price is = $53 + 37 = $90

For per customer it would be equal to

= (Total price) ÷ (number of customers)

= $90 ÷ 3

= $30

Basically  it shows a difference between the market price and actual price received by the customer