willingness to pay

Examples of willingness to pay in the following topics:

• Demand for Public Goods

  • However, each individual's willingness to pay for the quantity provided may be different.
  • The individual demand curves show the price someone is willing to pay for an extra unit of each possible quantity of the public good.
  • The aggregate demand for a public good is the sum of marginal benefits to each person at each quantity of the good provided .
  • The vertical summation of individual demand curves for public goods also gives the aggregate willingness to pay for a given quantity of the good.
  • The sum of the individual marginal benefit curves (MB) represent the aggregate willingness to pay or aggregate demand (∑MB).

• Mergers and Acquisitions (M&As)

  • M&A refers to the aspect of corporate strategy, corporate finance, and management dealing with the buying and selling of companies.
  • The combined company changed its name to Exxon Mobil Corporation
  • Mergers and Acquisitions have, at times, failed to add as much value as initially imagined by the parties involved.
  • Factors that matter include lower costs–shared activities, shared resources, economies of scale or scope-, and increased willingness to pay.
  • Diversify if (cost of having units A & B in same firm) < (cost of unit A in firm A) + (cost of unit B in firm B) - Boost in Willingness To Pay (aka, cross-selling) - Diversify if (WTP of activities A & B if done in same firm) > (WTP of activity A in firm A) + (WTP activity B in firm B)

• Value-Based Pricing

  • How much do you expect to pay for a large pizza?
  • Survey methods are sometimes used to determine value a customer attributes to a product or a service.
  • The results of such surveys often depict a customer's willingness to pay.
  • The principal difficulty is that the willingness of the customer to pay a certain price differs between customers, between countries, even for the same customer in different settings (depending on his actual and present needs), so that a true value-based pricing at all times is impossible.
  • Other constraints tend to be informal.

• Impacts of Surpluses and Shortages on Market Equilibrium

  • Surpluses and shortages often result in market inefficiencies due to a shifting market equilibrium.
  • In a perfectly competitive market, particularly pertaining to goods that are not perishable, excess supply is equivalent to the quantity available in the market beyond the equilibrium point of intersection between supply and demand.
  • In this theoretical scenario the equilibrium point will transition towards a lower price point due to the increased supply, which will in turn motivate consumers to purchase a higher quantity as a result.
  • This allows the economic model of the market to correct itself.
  • This will prioritize who receives the good or service based upon their willingness and ability to pay a premium for the specific item in demand, leveraging those along the demand curve who are at higher levels with higher ability and willingness to pay.

• Social Impacts of Monopoly

  • A monopoly can diminish consumer choice, reduce incentives to innovate, and control supply to enforce inequitable prices in a society.
  • To understand why trends towards consolidation are so dangerous it is useful to frame why competition is of such critical value to equitable markets, particular from a consumer perspective.
  • This allows monopolies to charge customers with a higher willingness to pay a higher price, while still charging consumers with a lower willingness to pay the standard prices.
  • This is unfair to consumers, who will be forced to pay whatever is asked as a result of no alternative options.
  • A monopoly with total control over the supply can charge any price that the consumer is willing to pay, and therefore can generate excessive margins while doing very little to improve their product/service or relevant processes.

• Willingness to Pay and the Demand Curve

  • Demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances.
  • Purchasing Power: Demand is measured based on a person's willingness to buy under the prevailing circumstances.
  • Ability to Decide: The individual must be able to choose to make a purchase.
  • There are two exceptions to this general rule.
  • If bread prices rise, the family will need to cut back on other groceries to make up the difference.

• Analysis of Price Discrimination

  • First degree price discrimination: the monopoly seller of a good or service must know the absolute maximum price that every consumer is willing to pay and can charge each customer that exact amount.
  • It is evident throughout markets and generates the highest revenue possible by shifting the price of a product based on the consumer's willingness to pay, quantity demanded, and consumer attributes.
  • A manufacturer can charge a higher price for a product which most consumers will pay.
  • The difference in price results in increased revenue because consumers are willing to pay more for the specific product.
  • Retail incentives: uses price discrimination to offer special discounts to consumers in order to increase revenue.

• The Demand Curve

  • Demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances.
  • When clients want a product and are willing to pay for it, we say that there is a demand for the specific product.
  • Demand does not only have to do with the need to have a product or a service, but also with the willingness and ability to buy it at the price charged for it.
  • Jeffries therefore boiled a few jars of jam and asked their friends and family if they were interested in buying it and how much they would be willing to pay for it.
  • However, demand is the willingness and ability of a consumer to purchase a good under the prevailing circumstances.

• General Economic Conditions

  • Various economic forces influence an organization's ability to compete and consumer's willingness and ability to buy products and services.
  • Consumers' ability and willingness to buy changes.
  • For marketers, opportunities were plentiful during prosperity, and they attempted to expand product lines to take advantage of consumers' increased willingness to buy.
  • During a recession, consumers' spending power is low, as they are busy paying off debts incurred through credit purchases during more prosperous time.
  • Illustrate how fluctuations in the economy influence consumers' willingness and ability to buy products and services

• Types of Elections

  • From the broad and general to the small and local, elections are designed to serve different purposes for various political voting systems.
  • When he fought his first contested local election, he demonstrated a willingness to put his policies to the ballot.
  • When he fought his first contested local election, he demonstrated a willingness to put his policies to the ballot.
  • Primaries are common in the United States, where their origins are traced to the progressive movement to take the power of candidate nomination away from party leaders and give it to the people.
  • The party may require them to express their support to the party's values and pay a small contribution to the costs of the primary.