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Appleville* is a small town in Eastern Washington where all residents are elderly. These people would be willing to pay for small house jobs, such

Appleville* is a small town in Eastern Washington where all residents are elderly. These people would be willing to pay for small house jobs, such as yard work, basic appliance maintenance, changing lightbulbs, that sort of thing. For simplicity, we will call each of these services a "chore". The table below shows the willingness to pay of each of the 5 elderly residents of Appleville:

Resident Name

Willingness to Pay for Chores

Olson

$50

Lincoln

$40

White

$30

Schultz

$20

Gutierrez

$10

The problem is that none of these residents know of anyone willing to perform these chores.

Anastasia is a young handywoman who lives relatively near Appleville, but she has never been there or knows anyone in this town. Her friend Steven Oldson tells her that his aunt lives there and he could recommend her to the residents of this town.

The table below shows Anastasia's willingness to sell her services on the day she drives to Appleville.

Chore

WTS

First

$20

Second

$25

Third

$30

Fourth

$35

Fifth

$40

Sixth

$45

Suppose Anastasia arrives in Appleville and announces her price: $30 per chore.

A) Draw a Supply and Demand graph for the chore market in Appleville.

B) Calculate the "value" of Steven Olson's recommendation for Anastasia. Identify it in your graph. Hint: producer surplus

C) Calculate the "value" of Steven Olson's recommendation for the residents of Appleville. Identify it in your graph. Hint: consumer surplus

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