Hello there!
Your question asks what Brett values his cell phone as.
Answer: $180
In order to get the answer for this question, we need to gather information that's provided in the question.
Key information:
- Buys new cellphone for $100.
- Consumer surplus of $80.
With the information above, we can figure out the answer for the question.
Since Brett bought the phone for $1000, Brett would count the $100 towards the value of his cell phone.
A consumer surplus is the lowest price someone is asking for. Therefore, there is someone that's selling the phone for $180 dollars, but then they sold it for a cheaper price. In the question, it says that he received $80 from the surplus, due to the fact that he got the phone for a cheaper price than it originally costed, so he will add that to the value of his phone.
When you do simple math:
100 + 80 = 180
This means that Brett would value his phone at $180.
$180 should be your FINAL answer
I hope this helps!
Best regards, MasterInvestor
