John has a stamp collection he values at $50,000.00. A stamp dealer

| November 24, 2016

John has a stamp collection he values at $50,000.00. A stamp dealer, Marty is prepared to offer $10,000.00 for the entire collection. (a) What is John’s threat value. What is Marty’s threat value. Will there be a transaction? Why or why not? (b) Chris, a friend of John, believes the collection is worth at least $60,000.00. What is Chris’ threat value. Will there be a transaction? Why or why not?

(c) What is the maximum value that transaction costs can be before the transaction in (b) fails? Why? (d) What factors will influence what the transaction costs will actually be in (b)?

Please explain what’s threat value and transaction cost as well

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