Scenario: Four Friends-Tom, Bill, Jeff, and Roger-Are Participating in an English

question 3

Multiple Choice

Scenario: Four friends-Tom, Bill, Jeff, and Roger-are participating in an English auction. Tom values the good being auctioned at $500, Bill values it at $210, Jeff values it at $350, and Roger values it at $625.
-Refer to the scenario above.If they are the only bidders in the auction and each bidder bids up to his value for the good,the winner will earn a surplus of ________.

• A) $500
• B) $625
• C) $125
• D) $150

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Definitions:

Marginal Cost

The extra expense involved in creating an additional unit of a product or service.

Variable Costs

Costs that vary directly with the level of production or the volume of output.

Lease

A contract by which one party conveys land, property, services, or goods to another for a specified period, usually in exchange for periodic payments.

Bouquets

A collection or arrangement of flowers.