Jim has an old (working) television that he would like to get ridof now that he has purchased a new high-definition, flat-screentelevision. The old television is no longer worth anything to himnow that he has his new flat-screen TV. Veronica on the otherhand has an even older television that has just broken down.She would pay up to $50 for any working TV. Which of thefollowing statements is NOT true?
A)If Jim trades Veronica his old television for $50, total value in society increases by $50.
B)If Jim trades Veronica his old television for $50, both are better off but total value in society does not increase.(True
Answer )Correct
C)If a middleman facilitates the $50 trade between Jim and Veronica, but takes a $10 finders' fee, Jim and Veronica will
Still both be better off.
D)If Jim and Veronica do not trade, both are worse off than if they did trade.

Question

Quizplus · Accepted Answer

The trade between Jim and Veronica increases the total value in society because it reallocates a resource (the television) from someone who values it less (Jim) to someone who values it more (Veronica). This increase in total value contradicts statement B, which claims that total value in society does not increase.

Jim Has an Old (Working) Television That He Would Like