The owner of a small business felt an obligation to pay $15,000 to a subcontractor, even though, because of an oversight, the subcontractor had never submitted a bill

Business Feb 06, 2021

The owner of a small business felt an obligation to pay $15,000 to a subcontractor, even though, because of an oversight, the subcontractor had never submitted a bill. Can willingness to pay under these circumstances be reconciled with the profit goal of a business in a free enterprise system

Expert Solution

Yes. Part of supply and demand for goods and services is pricing the product and having buyers who have a willingness to pay. Since the owner had the willingness to pay 15,000 the payment can then be reconciled with the profit goal of business in a free enterprise system in that paying will lead to the maximization of future products for all buyers and selling in a market system.

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