Quizzol

Person	Willingness and Ability to Purchase
Andrew	540,000
Beth	530,000
Lorenzo	750,000
Neha	660,000
Sam	620,000
Teresa	570,000

ANSWER:

Suppose that there are three plots of mountain resort land available for sale in Niseko and six potential buyers, each interested in purchasing one plot. Assume that all of the plots are basically indistinguishable and that the minimum selling price of each is $595,000. The following table lists each potential buyer's willingness and ability to purchase a plot of land.

Person	Willingness and Ability to Purchase
Person	(Dollars)
Andrew	540,000
Beth	530,000
Lorenzo	750,000
Neha	660,000
Sam	620,000
Teresa	570,000

Lorenzo, Neha, and Sam will purchase the plots because they are the only ones willing and able to meet the minimum selling price of $595,000. One or more of the other three people might have the ability, but not the willingness to pay the required price. Moreover, perhaps Teresa, Andrew, and Beth have a strong desire to own mountain resort land in Niseko, but do not have the ability to pay the selling price.

Now, assume that the three mountain plots have been sold to the people that you indicated in the previous section. Suppose that a few weeks after the last of those mountain plots is sold, another basically identical mountain plot goes on the market for sale at a minimum price of $582,500. This fourth plot will not Correct

be sold, becauseno one Correct

will purchase it from the seller for at least the minimum price.

Points:

0.5 / 1

To determine what will happen with the fourth plot, compare the minimum selling price with the willingness and ability to pay of the remaining buyers. The remaining buyer with the highest willingness and ability to pay is Teresa at $570,000. However, since $570,000 is less than the minimum selling price of $582,500 for this plot, no one will purchase the parcel. The seller will have to lower their minimum selling price if they want to find a buyer.