Question

Matt has decided to purchase his textbooks for the semester. His options are to purchase the books online with next day delivery at a cost of $175, or to drive to campus tomorrow to buy the books at the university bookstore at a cost of $170. Last week he drove to campus to buy a concert ticket because they offered 25 percent off the regular price of $16. Assume the minimum that Matt would be willing to accept to drive to campus is equal to the $4 he saved on the concert ticket. What would his economic surplus be if he bought his textbooks at the university bookstore rather than online?

Answer 1

Answer:

$1

Explanation:

According to the information provided, Matt's economic cost of going to campus to purchase stuff is $4. He has two options to purchase his books:

1. purchase the online at $175
2. purchase them personally at $170 + $4 economic cost of going to the campus = $174

If he purchases them personally, his economic surplus = $175 (maximum price he was willing to pay) - $174 (cost of purchasing the books personally) = $1