Elesha babysits on the weekends for extra money. Suppose that three neighbors wi

Question

Elesha babysits on the weekends for extra money. Suppose that three neighbors with children are interested in paying Elesha to babysit their chi be willing to pay $30 to have Elesha babysit their children, Mr. Smith would be willing to p $25 to have her watch their children children. In particular, Mr. and Dr. Brown would ay $28 for Elesha's babysitting services, and Professor Jones and Mr. Jones would be willing to pay babysit each set of children for an evening for $25, what will be consumer surplus, considering the three sets of children combi integer.)

Explanation / Answer

Maximum willingness to pay of Mr. and Dr. Brown = $30

Amount actually paid = $25

Consumer surplus of Mr. and Dr. Brown = Maximum willingness to pay - Amount actually paid = $30 - $25 = $5

Maximum willingness to pay of Mr. Smith = $28

Amount actually paid = $25

Consumer surplus of Mr. Smith = Maximum willingness to pay - Amount actually paid = $28 - $25 = $3

Maximum willingness to pay of Professor Jones and Mr. Jones = $25

Amount actually paid = $25

Consumer surplus of Professor Jones = Maximum willingness to pay - Amount actually paid = $25 - $25 = $0

Calculate the consumer surplus considering the three sets of children combined -

Consumer surplus = Consumer surplus of Mr. and Dr. Brown + Consumer surplus of Mr. Smith + Consumer surplus of Professor Jones

Consumer surplus = $5 + $3 + $0 = $8

The consumer surplus considering the three sets of children combined will be $8.

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