Answer to Question #69840 in Macroeconomics for ryteisear

Question

Suppose you own a bicycle but haven't found the time to ride it much lately. These days, it is only worth $43 to you. One of your close friends, who recently got a job at the college bookstore two miles down the road, wants to take it off your hands. He offers you $70 for the bicycle, and you gladly accept. Your friend is also happy because he thinks the bicycle is worth $97. How much total value was created from this trade?

Answer 1

Value for bicycle owner: $70-$43=$27
Value for buyer: $97-$70 = $27
Total value: $27*2=$54