Suppose the marginal benefit the owner of a cherry orchard derives from hiring Lauren to pick cherries is $8 per hour. If the wage rate that Lauren earns is $7 per hour, then the orchard owner's surplus from Lauren's labor is per hour.

The orchard owner's surplus from Lauren's labor is $1 per hour.

The orchid owner's surplus is the excess of marginal benefit over the marginal cost of labour.

Marginal benefit is the change in benefit as output increases by 1 unit. Marginal cost of labour is the change in the total cost of labour as hours worked increases by an hour.

Surplus = Marginal benefit - Marginal cost

$8 - $7 = $1

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$1 per hour

Explanation:

Data provided in the question

Lauren pick cherries per hour for $8 per hour

And, the wage rate that Lauren earns is $7 per hour

So, the surplus made from Lauren's labor per hour is

= Lauren pick cherries per hour - Wage rate that Lauren earns

= $8 per hour - $7 per hour

= $1 per hour

Simply we deduct the wage rate from the cherries per hour so that the surplus per hour could come

n

explanation: