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There are four consumers willing to pay the following amounts for haircuts: Gloria: $7 Jay: $2 Claire: $8 Phil: $5 There are four haircutting businesses with the following costs: Firm A: $3 Firm B: $6 Firm C: $4 Firm D: $2 Each firm has the capacity to produce only one haircut. For efficiency, how many haircuts should be given? Which businesses should cut hair and which consumers should have their hair cut? How large is the maximum possible total surplus?

BuyFind

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305156050
BuyFind

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781305156050

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Chapter
Section
Chapter 7, Problem 8PA
Textbook Problem

There are four consumers willing to pay the following amounts for haircuts:

Gloria: $7    Jay: $2    Claire: $8    Phil: $5

There are four haircutting businesses with the following costs:

Firm A: $3    Firm B: $6    Firm C: $4    Firm D: $2

Each firm has the capacity to produce only one haircut. For efficiency, how many haircuts should be given? Which businesses should cut hair and which consumers should have their hair cut? How large is the maximum possible total surplus?

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