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Amy buys a new computer for her studies for $1500. She receives consumer surplus of $250 from the purchase. How much does Amy value her computer? A. $1250 B. $1750 C. $1500 D. $250

Question

Amy buys a new computer for her studies for 1500.Shereceivesconsumersurplusof1500. She receives consumer surplus of 250 from the purchase. How much does Amy value her computer? A. 1250B.1250 B. 1750 C. 1500D.1500 D. 250

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Solution

Amy values her computer at 1750.Thisisbecauseconsumersurplusisthedifferencebetweenwhataconsumeriswillingtopayforagoodorserviceandwhattheyactuallypay.So,ifAmypaid1750. This is because consumer surplus is the difference between what a consumer is willing to pay for a good or service and what they actually pay. So, if Amy paid 1500 for the computer and received a consumer surplus of 250,thismeansshewaswillingtopay250, this means she was willing to pay 1500 + 250=250 = 1750 for the computer. So, the correct answer is B. $1750.

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