The Practice of Estimating Willingness to Accept

question 3

Multiple Choice

The practice of estimating willingness to accept

• A) asks how much compensation people require for a reduction in environmental quality.
• B) asks how much respondents are willing to pay for a reduction in environmental quality.
• C) is constrained by a respondents' ability to pay.
• D) is typically equivalent to a respondent's willingness to pay.

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Definitions:

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the number of units produced.

Units

Basic quantities or measures adopted by convention or by law, used as a standard to express physical quantities.

Diminishing Returns

An economic principle where the addition of a variable factor to a fixed factor leads to a decrease in the marginal output of the variable factor beyond a certain point.

Variable Factors

Components of production that can be adjusted in the short term to change the output level, such as labor and raw materials.