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Nathan buys a new sound system for his dorm room for $500. He receives consumer surplus of $400 from the purchase. At what am
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Answer #1

Answer: b) $900

..

Consumer surplus (CS) = Willingness to pay - Price actually paid.

willingness to pay is the same as the value of the product.

So value of the product = Consumer surplus + Price paid

Price paid = $500, CS = $400

So Nathan values the sound system at ($500 + $400) = $900

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