Two siblings inherit an estate and decide to use the sealed bids method to divide the assets. The dollar values assigned by each sibling for each asset are edgar 250,000 land 100,000 katy 180,000 land 170,000 what is each persons surplus



Answer :

Answer:

$70,000

Step-by-step explanation:

To determine the surplus for each sibling in the sealed bids method of dividing assets, each sibling submits a sealed bid for each asset. The asset is awarded to the sibling who bids the highest. The surplus for each sibling is the difference between the value they assign to an asset and the bid they need to pay, which in this case is the highest bid placed by either sibling.

Let's break down the bidding:

**Asset: Land**

- Edgar's value: $250,000

- Katy's value: $180,000

- Highest bid: Edgar's $250,000

- Edgar pays: $180,000 (Katy's highest bid)

- Katy pays: $0 (since she didn't win the bid)

**Surplus for Land**:

- Edgar's surplus: \( \text{Value - Highest bid by Katy} = $250,000 - $180,000 = $70,000 \)

- Katy's surplus: $0 (she didn't win the land)

**Asset: Another asset (not specifically named, so we'll just call it "Asset")**

- Edgar's value: $100,000

- Katy's value: $170,000

- Highest bid: Katy's $170,000

- Edgar pays: $0 (since he didn't win the bid)

- Katy pays: $100,000 (Edgar's highest bid)

**Surplus for Asset**:

- Edgar's surplus: $0 (he didn't win the asset)

- Katy's surplus: \( \text{Value - Highest bid by Edgar} = $170,000 - $100,000 = $70,000 \)

**Final Surplus Calculation**:

- **Edgar's Total Surplus**: $70,000 (from the land)

- **Katy's Total Surplus**: $70,000 (from the other asset)

Each sibling ends up with a surplus of $70,000 from the assets they respectively won.