Suppose You Are Planning to Sell Your House

Multiple Choice

Suppose you are planning to sell your house. You value your house at $200,000. If you do not hire a realtor, you will be able to sell your house to a buyer whose reservation price is $220,000. If you hire a realtor, you will be able to sell your house to a buyer whose reservation price is $250,000. Assume that the realtor's opportunity cost of negotiating the sale is $5,000. In this case, how much additional economic surplus is generated by using a realtor to sell your house?

A) None, because you value the house at $200,000 no matter who buys it.
B) $250,000.
C) $200,000.
D) $25,000.