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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
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.
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