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Old 01-06-2013, 12:12 PM   #3
FRiSson
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"Consumer Surplus" is an economic concept. It refers to the difference between the price on an item and the highest price that a consumer would be willing to pay for it.
Some sellers attempt to price an item as close as possible to the ultimate price - they are attempting to minimize the consumer surplus.

Other sellers take a different strategy, they deliberately sell items with a large consumer surplus... for example those 25 cent packs of gum. They believe that people will buy the gum in part due to its cheapness, not just from want. Other sellers price very high, because scarcity itself is a desirable commodity for some buyers (think Bentley). The question all sellers have is which strategy makes them the highest margin for each item, and ensures a certain longevity for the firm and product (exceptions to the latter rule are TV infomercial items and often have a deliberately short lifespan).

There is no effective way for a seller to determine what that point is. If you think of a group of buyers (on other words - the market), this works out to be a bell curve. At X dollars (the top of the curve) half of potential buyers would purchase the item. At X+1 dollars, perhaps 25% would purchase the item. At X+2, perhaps 10%. Conversely, at X-1 dollars, 75% would buy. You get the idea.

A buyer selling a very rare item, such as the FIrst 86 kit, has very little idea of what the items are worth. They have no intrinsic value, since they just replace items that already function. Their value is almost entirely sentimental. So it is a very hard thing for the seller to determine the value. He/she doesn't want to sell for too little, and doesn't want to sell for too high, because then it would take too long to sell.

The guy selling the First 86 items is simply trying to determine the market based on his/her estimation of the sentimental and scarcity value of the items.
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