Question

In the rural country of Catan, towns collect resources from their surroundings. Then, through trade, attempt to obtain other desirable items. Teuber, an urban town that specializes in brick and ore, wants wood to build roads so that it can expand and connect to other major cities. Teuber has a willingness to pay $50 for wood since wood is hard for them to obtain. Mayflair is wiling to pay $45 for wood. TIMBER, the only foresting company, sets the price of wood at $60.

The change in total surplus that arises due to trades between TIMBER and and the tows is:________.

-less than zero

-equal to zero

-greater than zero

Answer 1

The change in total surplus that arises due to trades between TIMBER and the tows is equal to zero Calculate total surplus when the cost is S35 Total Surplus Selling Cost-Wood Cost -40-35 S5 Therefore, as a result of this transaction the correct answer is total surplus increas ut the market is inefficien