Scenario: The table below shows the reservation values of ten buyers and a seller for a loaf of bread. Each buyer would buy at most one loaf and the seller can make up to ten loaves.

-Refer to the scenario above.One way to achieve the efficient outcome is to let the market work so that the equilibrium is reached.What is the difference between the largest and the smallest among buyers' surpluses (including those who do not get a loaf at the equilibrium price)?

Question

Scenario: The table below shows the reservation values of ten buyers and a seller for a loaf of bread. Each buyer would buy at most one loaf and the seller can make up to ten loaves.
 
-Refer to the scenario above.One way to achieve the efficient outcome is to let the market work so that the equilibrium is reached.What is the difference between the largest and the smallest among buyers' surpluses (including those who do not get a loaf at the equilibrium price)?

Quizplus · Accepted Answer

The largest buyer's surplus is $6.00 (for those who are willing to pay $10.00 for a loaf) and the smallest buyer's surplus is $3.50 (for those who are willing to pay $7.00 for a loaf). The difference between these two values is $2.50.

Scenario: the Table Below Shows the Reservation Values of Ten