If a motorist is stranded in front of a pay phone and has only dollar bills, and he ends up buying a quarter from a passerby for $1,
A) the stranded motorist must not understand that four quarters are worth $1.
B) economic theory is unable to explain this transaction.
C) both parties have gained from this exchange.
D) the passerby was made better off and the motorist worse off.

Question

Quizplus · Accepted Answer

Both parties have gained from this exchange because the motorist values the quarter more than the dollar bill at that moment, and the passerby values the dollar bill more than the quarter.

If a Motorist Is Stranded in Front of a Pay