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Think about your decision to buy the textbook for this course. You paid $200 for the book, but you would have been willing to pay $450 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the bookstore. Once you have completed the course, the book is worth only $50 to you. The bookstore will pay you 50% of the original $200.

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Hey there!

Think about your decision to buy the textbook for this course. You paid $200 for the book, but you would have been willing to pay $450 to use the book for the semester. Suppose that at the end of the semester you could keep your textbook or sell it back to the bookstore. Once you have completed the course, the book is worth only $50 to you. The bookstore will pay you 50% of the original $200.

How much total value have you gained?

Price paid for the book = $200

Willingness to pay = $450

The consumer surplus is the difference between the money actually paid and what the consumer is willing pay.

The consumer surplus or gain in this case is = $450 - $200 = $250--------- (1)

At the end of the semester if you are selling the book, you will get 50% of the original Price $200.

So the gain at the end = 50% of $200 = $100

However at the time of course completion the book worth only $50

So the net gain at the end of the course = $100 - $50 = $50---------(2)

Total value gained = (1) + (2)

Total value gained = $250 + $50 = $300

I hope this will help !

User YanMeng
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