Question

The selling price of a product is $8,000. The cost and hassle involved in buying the product is $175. The benefit received from the product to a buyer is labelled "A." The seller's profit is $400. In this case, which of the following equations will accurately calculate the buyer's value?

Answer 1

Answer:

These are the options for the question:

a) A + $8,000

b) $8,000 + $400

c) $8,000 - A

d) A-($8,000 + $175)

e) (A + 400) - ($175)

And this is the correct answer:

d) A-($8,000 + $175)

Explanation:

The buyer's value is the total value that a consumer obtains from a product after substracting the purchase cost, and the cost of the personal effort involved in obtaining the product.

The formula is:

Buyer's Value = Benefit Received - (Selling Price + Cost of Effort to Purchase)

If we plug the amounts into the formula we obtain the correct option:

Buyer's Value = A - ($8,000 + $175)