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

a. For how many hours should you hire the movers? How much consumer surplus do you receive?

b. 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 8-hour day. Would you hire the movers?

How has your consumer surplus changed?