A consumer's willingness to pay is:
A)always equal to the market price
B)the maximum amount he or she is prepared to pay for a good
C)the average amount he or she is prepared to pay for a good
D)always more than the market price

Question

Quizplus · Accepted Answer

A consumer's willingness to pay refers to the maximum amount he or she is prepared to pay for a good. Therefore, option B is the correct answer. Option A is incorrect because the willingness to pay can be higher or lower than the market price depending on the consumer's perception of the good's value. Option C is incorrect because the willingness to pay can vary among consumers and is not necessarily an average amount. Option D is incorrect because the willingness to pay can be equal to, higher than, or lower than the market price.

A Consumer's Willingness to Pay Is