Melissa buys a phone for $200 and has CS of $80. What is her willingness to pay?

The correct answer is: $280.

Explanation:

Consumer Surplus is an economic measure of consumer satisfaction which is calculated by analyzing the difference between what consumers are willing to pay for a good or service, relative to its market price. A consumer surplus occurs when a consumer is willing to pay more for a given product than the current market price.

In the example:

Consumer surplus = Consumer willingness to pay - Current market price

$80 = Consumer willingness to pay - $200

$280 = Consumer willingness to pay

Melissa is willing to pay $280 for the phone.