Answer to Question #281587 in Microeconomics for leaf

Question

A used car salesman purchases a car from its previous owner at a price of $4,500, although the owner was willing to sell it for as little as $4,000. The salesman later sells the car to a new buyer for $6,000, although that buyer was actually willing to pay up to $6,500.

What percentage of the value created by the trade is captured by the buyer who purchases the car from the used car salesman?

Answer 1

Total Value created:

$=(4500-4000)+(6000-4500)$

$=2000$

Percentage of value created by the trade that is captured by the buyer,

$=\frac{1500}{2000}\times 100=75$%