Question

Brett buys a new cell phone for $600. He receives consumer surplus of $80 from the purchase. How much does brett value his cell phone

Answer 1

Brett values his cell phone at $680 if he buys a new cell phone for $600 and if he receives a consumer surplus of $80 from the purchase.

Consumer surplus is the difference between the most expensive a purchaser is willing to pay for a good or service and the actual rate they pay. Mathematically, consumer surplus can be calculated by using the formula,

consumer surplus = willingness to pay the cost - the actual price

$80 = willingness to pay the cost - $600

willingness to pay the cost = $600 + $80

willingness to pay the cost = $680

Therefore, the value of Brett's cell phone is $680.