Assume that the supply curve is horizontal because marginal cost is constant at $10.If John,Robert,and Jimmy each value one compact disc at $20 but only Jimmy values a second compact disc,then the total value in this market is $35 if
A) Jimmy's value for a second compact disc is $0.
B) Jimmy's value for a second compact disc is $5.
C) Jimmy's value for a second compact disc is $10.
D) Jimmy's value for a second compact disc is $35.

Question

Quizplus · Accepted Answer

The total value in the market is calculated by adding the value each individual places on the compact discs they are willing to purchase at or above the marginal cost ($10). John and Robert each value one disc at $20, contributing $20 each to the total value. Jimmy values the first disc at $20 and the second disc at $5. Since the second disc's value ($5) is below the marginal cost ($10), it does not contribute to the total market value. Thus, the total value is $20 (John) + $20 (Robert) + $20 (Jimmy's first disc) = $60. The choice mentioning $35 as the total value is incorrect based on the given values.

Assume That the Supply Curve Is Horizontal Because Marginal Cost