Suppose the seller's opportunity cost of producing shirts is $12 and the buyer's valuation is $22.If the seller gains $2 more than the buyer from this transaction, what is the price at which the good is exchanged between the two parties?

Question

Quizplus · Accepted Answer

If the seller's opportunity cost is $12 and gains $2 more than the buyer's valuation of $22, then the seller must receive $24. 
The price of the shirt is somewhere between the buyer's valuation of $22 and seller's opportunity cost of $12. 
Since the seller is gaining $24 - $12 = $12 from the transaction, the price must be $12 + $12 = $24. 
Therefore, the only option that falls between $12 and $24 is option B) $18.

Suppose the Seller's Opportunity Cost of Producing Shirts Is $12