Suppose that there are three beachfront parcels of land avaia Assume that willin

Question

Suppose that there are three beachfront parcels of land avaia Assume that willingness and ablaty to purchase a pancel. ble for sale in Asilomar and six people who would each like to purchase one parcel the parcels are essentially kdentical and that the minimum selling price of each is s570,000. The following table states each person's Ana Charte Dina Rajiv Simone Yakov Willingness and Ability to Purchase Dollars) 550,000 510,000 500,000 700,000 630,000 590,000 Which of these people will buy one of the three beachfront parcels? Check al that apply Ana D Charles Dina Rajiv B Simone Assume that the three beachfront parceis are sold to the people that you indicated in the previcus section. Suppose that a few days after the last or those beachfront parcels is soid, another essentialy identical beachfront parcel becomes available for sale at a minimum pnce of $560,000. This feurth be sold, becausew wil purchase it from the seller for at least the minimum price

Explanation / Answer

Answer.)

1.) Rajiv

2.) Simone

3.) Yakov

Will buy one of the Beachfront parcels as the minimum selling price ($570,000) is less than their respective willingness and ability to purchase .

Now, if the fourth Beachfront parcel is available at a minimum selling price of $560,000 then this fourth parcel WILL NOT be sold , because NO ONE will purchase it from the seller for at least the minimum price.

(Note that willingness and ability to pay of Ana, Charles and Dina is less than the minimum selling price of fourth Beachfront parcel thus they wouldn't purchase it. )

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