In behavioral economics, willingness to pay (WTP) is the maximum price at or below which a consumer will definitely buy one unit of a product.[1] This corresponds to the standard economic view of a consumer reservation price. Some researchers, however, conceptualize WTP as a range. Show
According to the constructive preference view, consumer willingness to pay is a context-sensitive construct; that is, a consumer's WTP for a product depends on the concrete decision context. For example, consumers tend to be willing to pay more for a soft drink in a luxury hotel resort in comparison to a beach bar or a local retail store. See also[edit]
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Demand What is Demand?
Companies often want to find the demand for their products or services. Various companies do surveys to understand the demand. Demand at particular price points helps companies price their products or services. Demand is an incomplete
concept without supply. Factors responsible for demand
Demand and Supply Curves The demand curve is a downward-sloping curve. As the price goes up, the demand goes down. Similarly, the supply curve is an upward sloping curve. As the price goes up, the supply goes up. Thus, the demand and supply can be plotted on a graph as a function of a price considering all other factors remaining constant. Market Equilibrium Free markets tend to find the correct price for a product or service. This process is called price discovery. The price, as determined by the intersection of demand and supply, forms the market price of the goods. Market Demand Vs Aggregate Demand Market demand is the demand in the market for particular goods and services. As the market demand checks the particular goods and services, factors like competitive products can affect the market demand. Aggregate demand is the demand for all products and services in an economy. As competing products should not limit the demand for all goods and services, aggregate demand is based on just the economic factors and not the individual ones. Macroeconomic Policy and Demand Similarly, if the aggregate demand in the economy is low, the central banks pump money into the markets and undertake interest rate reductions to increase the demand. Thus central bank policy is more demand-related and is based on demand-side factors. In some cases, the central banks can’t increase the aggregate demand. This usually happens when the unemployment rate is high and the economy is in a recession. In the case of high unemployment, the demand is low even with low-interest rates, as the demand for debt is low because of job uncertainty. What are aggregate demand and market
demand? What is equilibrium price? Disclaimer: This content is authored by an external agency. The views expressed here are that of the respective authors/ entities and do not represent the views of Economic Times (ET). ET does not guarantee, vouch for or endorse any of its contents nor is responsible for them in any manner whatsoever. Please take all steps necessary to ascertain that any information and content provided is correct, updated and verified. ET hereby disclaims any and all warranties, express or implied, relating to the report and any content therein. What term is described as desire for an item and a willingness to pay for it?Demand is an economic concept that relates to a consumer's desire to purchase goods and services and willingness to pay a specific price for them.
What is the desire and willingness ability to buy a product called?Demand refers to the consumer's desire and willingness to buy a product or service at a given period or over time.
What is referred to as the willingness to buy?Willingness to pay (WTP—how much one is willing to pay for something) and willingness to buy (WTB—whether one is willing to buy something at a given price) are two common methods to elicit valuations and normatively should yield the same valuation order between two options.
What is called as the desire of a consumer to purchase goods or services at a given price?Demand is simply the quantity of a good or service that consumers are willing and able to buy at a given price in a given time period.
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