Melissa buys an iPhone for $240 and gets consumer surplus of $160.

Melissa buys an iPhone for $240 and gets consumer surplus of $160.

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September 3, 2023
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Melissa buys an iPhone for $240 and gets consumer surplus of $160.

a. What is her willingness to pay?

b. If she had bought the iPhone on sale for $180, what would her consumer surplus have been?

Answer and ExplanationSolution by a verified expert

Here is a tip:
The consumer surplus is the benefit gained by an individual on the purchase of a good.

Explanation
The consumer surplus is the difference between the actual price of a good and the maximum willingness of a consumer to pay. By rearranging, the maximum willingness of a consumer to pay is calculated as follows:

\begin{aligned} \text{Maximum willingness to pay} &= \text{consumer surplus + price of commodity} \\ &=\$ \text{160+} \$ \text{240} \\ &=\$\text{400}\end{aligned}
Maximum willingness to pay ​=consumer surplus + price of commodity=$160+$240=$400​
Verified Answer
$400

B
Here is a tip:
The consumer surplus is the benefit gained by an individual on the purchase of a commodity.

Explanation
The consumer surplus is the difference between the actual price of a commodity and the price that the consumer is willing to pay for the commodity.

\begin{aligned} \text{Consumer surplus }&=\text{\,Willingness to pay }-\text{\,price of commodity} \\ &=\$ \text{400-} \$ \text{180}\\ &=\$\text{220}\end{aligned}
Consumer surplus ​=Willingness to pay −price of commodity=$400-$180=$220​
Verified Answer
$220

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