You are planning a move across town. Doing your research you find that the average rate of a moving company is $250 per hour for two movers (moving truck included). The marginal benefit you receive from each hour of the two movers’ time (and truck) is listed in the accompanying table.Hours of movers’ timeMarginal benefit1 hour$8502 hours$6203 hours$5004 hours$2505 hours$1506 hours$1007 hours$0For how many hours should you hire the movers? How much consumer surplus do you receive?Now suppose that instead of paying per hour, a moving company offers a flat rate of $1,500 for two movers plus a truck for an eight-hour day. Would you hire the movers? How has your consumer surplus changed?

1) Hours Marginal Benefits Marginal Cost Consumer Surplus 1 hour $850 $250 600 2 hour $620…

Answered: You are planning a move across town.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are planning a move across town. Doing your research you find that the average rate of a moving company is $250 per hour for two movers (moving truck included). The marginal benefit you receive from each hour of the two movers’ time (and truck) is listed in the accompanying table.

Hours of movers’ time Marginal benefit

1 hour $850

2 hours $620

3 hours $500

4 hours $250

5 hours $150

6 hours $100

7 hours $0
1. For how many hours should you hire the movers? How much consumer surplus do you receive?
2. Now suppose that instead of paying per hour, a moving company offers a flat rate of $1,500 for two movers plus a truck for an eight-hour day. Would you hire the movers? How has your consumer surplus changed?

Hours of movers’ time	Marginal benefit
1 hour	$850
2 hours	$620
3 hours	$500
4 hours	$250
5 hours	$150
6 hours	$100
7 hours	$0

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