Dan Owns an Autographed Copy of a Brittany Spears CD

question 86

Multiple Choice

Dan owns an autographed copy of a Brittany Spears CD that he values at $100. If he sells the CD at the garage sale he's planning to hold in a few weeks, it will be sold to a buyer with a reservation price of $175. If he sells it on eBay, it will be sold to a buyer with a reservation price of $500. eBay will charge Dan $50 to auction the CD, which just covers eBay's opportunity cost of running the auction. Relative to selling the CD at his garage sale, auctioning the CD on eBay will lead:

• A)to no change in total economic surplus.
• B)total economic surplus to increase by $500.
• C)total economic surplus to increase by $275.
• D)total economic surplus to increase by $100.