Scenario: the Table Below Shows the Reservation Values of Ten

question 177

Multiple Choice

Scenario: The table below shows the reservation values of ten buyers and a seller for a loaf of bread. Each buyer would buy at most one loaf and the seller can make up to ten loaves.

-Refer to the scenario above.Suppose that the government forces the seller to sell 10 loaves,each at its marginal cost,to the government.Then the government sells the 10 loaves to buyers,one for each buyer,at their reservation values.What is the social surplus? What is the difference between the largest and the smallest among buyers' surpluses?

• A) $2.00; $1.00
• B) $1.00; $0.50
• C) $0.85; $0.25
• D) $0.30; $0.00

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