A consumer values a car at $525,000 and a producer values the same car at $485,000.If the transaction is completed at $510,000,the transaction will generate:

Question

Quizplus · Accepted Answer

This is an example of a situation where both the buyer and seller can achieve a surplus if the transaction occurs at a price between their valuations. In this case, the buyer's highest willingness to pay is $525,000, while the seller's lowest willingness to accept is $485,000. The transaction occurs at $510,000. Therefore, the buyer benefits from a surplus of $15,000 ($525,000 - $510,000), while the seller benefits from a surplus of $25,000 ($510,000 - $485,000). Therefore, the correct option is C.

A Consumer Values a Car at $525,000 and a Producer