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You want to buy a new book. The benefit you get from the book, expressed in dollars, is $100 The price is $9. If you don't buy the book, you buy a new computer game that also costs $9. The benefit you get from the game, expressed in dollars, is $45. What is your willingness to pay for the book? Enter a number only, drop the $ sign. 100 64

You want to buy a new book. The benefit you get from the book, expressed in dollars, is $100 The price is $9. If you don't buy the book, you buy a new computer game that also costs $9. The benefit you get from the game, expressed in dollars, is $45. What is your willingness to pay for the book? Enter a number only, drop the $ sign. 100 64

Microeconomics: Principles & Policy
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter22: Contemporary Issues In The U.s. Economy
Section: Chapter Questions
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You want to buy a new book. The benefit you get from the book, expressed in dollars, is $100 The price is $9. If you don't buy the book, you buy a new computer game that also costs $9. The benefit you get from the game, expressed in dollars, is $45. What is your willingness to pay for the book? Enter a number only, drop the $ sign. 100 64 Economists use the general rule that people should buy the good as long as Benefits > Opportunity Costs. But when you buy a book, typically you compare Willingness to Pay (WTP) to price. We can move things around to convert the Benefits > Opportunity Costs into a WTP > Price comparison. For example in this case you would buy the book if Value from the book > Value from the next best alternative. To get the price, add and subtract the price on the right hand side of the equation and then keep the price on the right hand side and mover everything else over to the left hand side and rename it WTP. See the problem set, tutorials and videos for more details.
Transcribed Image Text:You want to buy a new book. The benefit you get from the book, expressed in dollars, is $100 The price is $9. If you don't buy the book, you buy a new computer game that also costs $9. The benefit you get from the game, expressed in dollars, is $45. What is your willingness to pay for the book? Enter a number only, drop the $ sign. 100 64 Economists use the general rule that people should buy the good as long as Benefits > Opportunity Costs. But when you buy a book, typically you compare Willingness to Pay (WTP) to price. We can move things around to convert the Benefits > Opportunity Costs into a WTP > Price comparison. For example in this case you would buy the book if Value from the book > Value from the next best alternative. To get the price, add and subtract the price on the right hand side of the equation and then keep the price on the right hand side and mover everything else over to the left hand side and rename it WTP. See the problem set, tutorials and videos for more details.
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