Imagine now that you are a homeowner and you need to get your house painted. You turn to four sellers of painting services: Mary Frida, Georgia and Grandma. Each painter is willing to do the work for you if the price is right. You decide to take bids from the four painters and auction off the job to the painter who will do the work for the lowest price. Each painter is willing to take the job if the price she would receive exceeds her cost do doing the work. Here the term cost should be interpreted as the painters opportunity cost. It includes the painters out-of-pocket expenses for paint, brushes and so on) as well as the value that the painters place on their own time. Each painter’s cost. Because a painter’s cost is the lowest price she would accept for her worke cost is a measure of her willingness to sell her services. Each painter would be eager to sell her services at a price greater than her cost and she would refuse to sell service at a price less than her cost...