Jim has an old (working) television that he would like to get rid of now that he has purchased a new high-definition, flat-screen television. The old television is no longer worth anything to him now that he has his new flat-screen TV. Veronica on the other hand has an even older television that has just broken down. She would pay up to $50 for any working TV. Which of the following statements is NOT true?
A) If Jim trades Veronica his old television for $50, total value in society increases by $50.
B) If Jim trades Veronica his old television for $50, both are better off but total value in society does not increase.
C) If a middleman facilitates the $50 trade between Jim and Veronica, but takes a $10 finders' fee, Jim and Veronica will still both be better off.
D) If Jim and Veronica do not trade, both are worse off than if they did trade.

Question

Quizplus · Accepted Answer

If Jim trades Veronica his old television for $50, total value in society increases by $50 because Veronica values the TV at $50, which is more than its value to Jim (which is zero).

Jim Has an Old (Working) Television That He Would Like