Asked by Mohamed Bawazir on Jul 17, 2024
Verified
Jim is haggling with a car dealer on the price of a used car.During the bargaining,Jim discovers that the car has a significant number of scratches which he had not noticed before.The total surplus from the sale has
A) Increased
B) Decreased
C) Was not affected
D) All of the above
Total Surplus
The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from the production and consumption of goods or services.
Sale Price
The final price at which an item or service is sold, often after discounts or negotiations.
Scratches
Marks or superficial damage on a surface caused by scraping or abrasion, often affecting the appearance or function of an item.
- Master the understanding of bargaining and negotiation within various scenarios.
- Understand the effect that changes in the valuation of alternatives (disagreement value) have on the balance of power in negotiations.
Verified Answer
JL
Jacelyn LeongJul 20, 2024
Final Answer :
B
Explanation :
The presence of significant scratches decreases the value of the car, which in turn decreases the total surplus from the sale. Therefore, the total surplus has decreased.
Learning Objectives
- Master the understanding of bargaining and negotiation within various scenarios.
- Understand the effect that changes in the valuation of alternatives (disagreement value) have on the balance of power in negotiations.