Asked by Kayla Ellison on Jul 02, 2024
Verified
If you are willing to purchase a house for $500,000 and you purchase the house for $500,000,this transaction will generate:
A) There is no surplus created for either of the party.
B) $0 worth of seller surplus and unknown amount of buyer surplus.
C) $0 worth of buyer surplus and unknown amount of seller surplus.
D) No information provided.
Surplus Created
The excess of production or supply over demand, resulting in a situation where the quantity of goods exceeds the quantity needed or demanded.
Purchase
The act of buying goods or services; the transaction process through which a buyer acquires products or services in exchange for money.
- Familiarize oneself with the situations where transactions contribute to wealth or surplus formation.
Verified Answer
AB
Amanda Buratti6 days ago
Final Answer :
C
Explanation :
Since the buyer is willing to purchase the house for $500,000 and the actual purchase price is also $500,000, there is no buyer surplus generated. Similarly, since the seller is selling the house for $500,000 and the actual purchase price is also $500,000, there is no seller surplus generated. Therefore, the transaction generates $0 worth of buyer surplus and $0 worth of seller surplus.
Learning Objectives
- Familiarize oneself with the situations where transactions contribute to wealth or surplus formation.