Weird Micro-Econ Question?

Question

Bill sees a classified ad offering a used DVD player for $5. On the opposite page, he sees a big color ad from a national electronics chain offering new DVD players for $50. Bill values a DVD player at $75 as long as it works, regardless of whether it is new or used.

Suppose that the seller of the DVD player, Al, was honest. He had a DVD player, and then his parents gave him a new one for his birthday, so rather than throw the old one away he tried to find it a new home and make a few dollars. What should Al have done to sell it successfully?

A. He should have posted a picture of the DVD player along with his ad, to make it look more attractive.

B. He should have asked $45 to show that it was a good deal.

C. He should have asked $20 and sold it with a guarantee that he would replace it with a new DVD player if it turned out not to work.

D. He should have offered the DVD player for free to anyone who would take it.

Will A work?

Answer 1

C. He should have asked $20 and sold it with a guarantee that he would replace it with a new DVD player if it turned out not to work.

This is best opportunity for both sides of the deal. buyer receives switch-on warranty and seller receives profit, thus surplus for both will be maximized.

"A" doesn't brings any pricing information.