Answer to Question #60808 in Microeconomics for aiyappa

Question

Melissa buys an ipod for $100 and gets a consumer surplus of $80. what was her willingness to pay ? If she had bought the ipod on sale for $70, what would her consumer surplus have been? if the price of an ipod were $200 what would her consumer surplus have been ?
show all the above scenarios with diagrams

Answer 1

If Melissa buys an iPod for $100 and gets a consumer surplus of $80, then her willingness to pay is $100 + $80 = $180.
If she had bought the iPod on sale for $70, then her consumer surplus have been 180 - 70 = $110.
If the price of an iPod were $200, then her consumer surplus have been 180 - 200 = -$20, so Melissa would not buy this iPod.