Suppose You Are Able to Babysit at $10 Per Hour

question 166

Essay

Suppose you are able to babysit at $10 per hour. The only cost to you is the opportunity cost of your time. For the first 2 hours, the opportunity cost of your time is $7 per hour. But after 2 hours, the opportunity cost of your time rises to $13 because of other commitments. Draw the marginal cost to you of babysitting. Draw in the price you receive for babysitting. For how long will you babysit? Calculate your producer surplus.

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Definitions:

Paid

A status indicating that a financial obligation or debt has been fulfilled.

Voidable

Describes a legal agreement that may be declared invalid by one of the parties due to specific conditions such as fraud, coercion, or incapacity.

Minors

Individuals who are under the age of legal competence or adulthood, typically under 18 years old.

Purchase

The act of acquiring goods or services in exchange for money or other consideration.