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Suppose you inherit an antique doll from your Great Aunt Sadie. The doll has a sentimental value of $100 to you. Jane is a collector who is willing to pay $800 for your doll. If you sell the doll to Jane for $600, your producer surplus is _____ and Jane's consumer surplus is _____, respectively:

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Final answer:

The producer surplus from selling the antique doll for $600 when it is valued at $100 is $500. Jane's consumer surplus, willing to pay $800 but paying $600, is $200.

Step-by-step explanation:

If you inherit an antique doll with a sentimental value of $100 and sell it to Jane, a collector who is willing to pay $800, for $600, your producer surplus is the difference between the selling price and your valuation of the doll. Since the doll is worth $100 to you and you sell it for $600, your producer surplus is $600 - $100 = $500. Jane's consumer surplus is the difference between her willingness to pay and the actual price she pays. Therefore, if she's willing to pay $800 and buys the doll for $600, her consumer surplus is $800 - $600 = $200. In economic terms, producer surplus represents the benefit to sellers, and consumer surplus represents the benefit to buyers above their respective thresholds of selling and buying prices.

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