Author Question: Suppose a seller's opportunity cost matches a buyer's valuation of the product. Assuming a ... (Read 64 times)

Metfan725 · **on:** Jun 30, 2018

Suppose a seller's opportunity cost matches a buyer's valuation of the product. Assuming a two-person economy, which of the following statements will be true?
a. The transaction will benefit the buyer, while the seller will neither gain nor lose from it.
b. The economic value created by this exchange will be zero.
c. Both parties will be worse-off after the transaction.
d. The seller will be worse-off than the buyer after the transaction.

Question 2

Assume that one laborer produces 6 units of output, two laborers produce 14 units, three produce 20 units, and four produce 24 units. If the cost is 20 per unit of labor and fixed costs are 100, what is the average total cost of producing 14 units of output?
a. 50
b. 20
c. 10
d. 100
e. 40