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. total economic surplus to increase by $100.
B. total economic surplus to increase by $500.
C. to no change in total economic surplus.
D. total economic surplus to increase by $275.
Answer: D
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Policy-oriented economists seek to develop theories to
a. explain how things work so policies can be formulated. b. describe what happened in a particular time period in history. c. describe current economic events. d. find correlations between events. e. change people's values and ethics.
Net exports equals
A) exports divided by imports. B) the sum of exports and imports. C) exports minus imports. D) exports during the year. E) none of the above
How international immobility of resources is compensated by international flow of goods
What will be an ideal response?
Suppose that FDI has "spillover" benefits for the recipient nation (such as spurring technological innovation, more FDI, or growth in labor productivity). These spillover effects might help explain why:
a. in Singapore, wages fell in the short run. b. in Singapore, wages fell and returns to capital rose in the long run. c. in Singapore, wages rose and, depending on the calculation used, returns to capital were close to original levels in the long run, which contradicted the HO model. d. in Singapore, absolutely nothing changed in either the short or the long run.