Joe is willing and able to pay up to $25 for a car wash and he pays $20 for the car wash. Mike, the owner of the car wash, is willing and able to...
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4a. Joe is willing and able to pay up to $25 for a car wash and he pays $20 for the car wash. Mike,

the owner of the car wash, is willing and able to charge Joe for the car wash for no less than $15. What does Joe's consumer surplus equal? What does Mike's producers surplus equal? What does total surplus equal? Please show all calculations and your work!

 

4b. Suppose the price of the car wash falls from $20 to $17. What does Joe's new consumer surplus equal? What does Mike's new producer surplus equal? What does the new total surplus equal? Please show all calculations and your work! Also, who benefits from the price decrease of the car wash, Joe or Mike? Why? Explain by using your own words and the results from the calculations you performed in 4a and 4b.

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4. a Joe's consumer surplus is $5 Mike's producer surplus is $5 4.b Joe's consumer surplus is $5... View the full answer

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