Sydney Sells Snow Globes from a Cart

question 42

Multiple Choice

Sydney sells snow globes from a cart. When the cart is located on the sidewalk near a discount store, Sydney's customers have reservation prices of $5. When Sydney's cart is located on a sidewalk in an upscale mall, wealthier customers with reservation prices of $10 buy snow globes. Assume that Sydney can sell the same volume at either location and that marginal and average costs are $3 per globe at both locations. Information about the reservation prices of Sydney's customers increases total surplus by:

• A)allowing consumers with different incomes to acquire things they value.
• B)helping to ensure that snow globes go to consumers who like them most.
• C)encouraging sellers to locate in underserved areas.
• D)helping to ensure that snow globes go to consumers with the greatest willingness to pay.