Question: Look at Exhibit 7.1 in the chapter that shows the reservation values of the buyers and sellers in the iPod market. Suppose trades are arranged

Look at Exhibit 7.1 in the chapter that shows the reservation values of the buyers and sellers in the iPod market. Suppose trades are arranged in this market such that everyone can make a trade without losing money. So, Madeline buys from Fiona at a price of $70, Katie buys from Matt at a price of $60, Sean buys from Adam at a price of $50 and so on.

Since everyone who wants an iPod obtains one, and everyone who wants to get rid of their iPod sells it at the price they wanted, is social surplus maximized in the market?

Reservation Values of Buvers and Sellers in the iPod Market Value(S) 70 60 50 40 30 20 10 Buyers Madeline Katie Sean Dave Ian Kim Ty Sellers Tom Mary Jeff Phil Adam Matt Fion Cost (S) 10 20 30 40 50 60 70

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