The willingness to pay for a commodity: A

Economics Dec 13, 2020

The willingness to pay for a commodity:

A. decreases as consumption of the commodity increases.

B. increases as consumption of the commodity increases.

C. is always less than the market price of the commodity.

D. is always greater than the market price of the commodity.

Expert Solution

The correct answer to the given question is option D. is always greater than the market price of the commodity.

The maximum price which a consumer is willing to pay for a consumption of goods or service governs the consumer surplus of the consumer. The consumer surplus for a customer is defined as the difference between the market price of a commodity and the maximum price that the customer is willing to pay. Usually, the maximum price which the customer is willing to pay is greater than the market price or equilibrium price.

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