What exactly is an unlocked iphone and why are they selling for so much on Ebay?

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Angrygirl5 asked:

This may sound like a dumb question. But I was looking to buy an iphone. On the apple site, they are $399-$499. Then, on ebay, they are selling unlocked iphones for a lot more. Does that mean that you can use it with any carrier other than AT&T? Is that even legal?

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