Tim Has Just Inherited a Signed Wayne Gretzky Hockey Jersey,which

question 113

Multiple Choice

Tim has just inherited a signed Wayne Gretzky hockey jersey,which he would like to sell.His reservation price for the jersey is $500,and he can either place an ad in the local newspaper for $10 or sell the jersey on eBay,which will charge him 5% of the selling price.The local buyer with the highest reservation price is willing to pay $750 at most,while the two eBay bidders with the highest reservation prices are willing to pay $1,200 and $1,000,respectively.(Note that,in an eBay auction,the bidder with the highest reservation price wins,and the price paid is the reservation price of the second-highest bidder. )
-Refer to the information above.If Tim advertises his jersey in the local newspaper and sells it to the local buyer with the highest reservation price,his economic surplus will be

• A) $240.
• B) $490.
• C) $500.
• D) $740.
• E) $750.

---

Definitions:

Inferior Good

A good for which a rise in income decreases the demand for the good.

Income Elasticity

A measure of how much the quantity demanded of a good changes in response to a change in consumers' income.

Peanut Butter

A food paste or spread made from ground, dry-roasted peanuts, often used as a sandwich filling or ingredient in various recipes.

Income Elasticity

Measures how the quantity demanded of a good responds to a change in consumer income.