What is willingness to pay (WTP)? Give an example

Economics Dec 13, 2020

What is willingness to pay (WTP)? Give an example.

Expert Solution

The willingness to pay is the maximum price a consumer/buyer consents to pay for a good or service in the market. It is firmly connected with the advantages, the quality, and the utility of the products for the customer. For instance, let's suppose when the price of a milkshake is $4, Mr. A will not buy the milkshake as his willingness to pay is lower or less than the price of a milkshake i.e $3 for a milkshake.

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