The Maximum Price That a Buyer Will Pay for a Good

question 25

Multiple Choice

The maximum price that a buyer will pay for a good is called the

• A)cost.
• B)willingness to pay.
• C)Equity.
• D)efficiency.

---

Definitions:

Utility From Milk

The satisfaction or benefit a consumer receives from consuming milk, assessing its nutritional value and taste preferences.

Optimal Consumption Rule

A guideline suggesting that to maximize utility, consumers should allocate their budget in a way that the last dollar spent on each good or service yields the same level of marginal utility.

Marginal Utility

The extra gratification or advantage a person receives by consuming an additional unit of a specific good or service.

Marginal Utilities

The extra pleasure or benefit a consumer gets from purchasing and using an additional unit of a product or service.