Question

amounts for haircuts:
There are four haircutting businesses with the follow-
pay
the following
8.
Gloria: $7
Jay: $2.
Claire: $8
Phil: $5
ing costs:
Firm C: $4
Firm D: $2
Firm A: $3 Firm B: $6
11
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?​

Answer 1

Explanation:

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

Jerry: $7

Oprah: $2

Sally Jessy: $8

Montel: $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?