Willingness to pay
Definition. Willingness to pay is the maximum price a consumer is prepared to pay for a unit of a good, reflecting the value or benefit that unit gives them. The height of the demand curve at any quantity shows the willingness to pay for that marginal unit.
When a consumer willingness to pay exceeds the price actually paid, the difference is consumer surplus. Summing this gap over all units bought gives total consumer surplus in the market.
This term belongs to Consumer and Producer Surplus in A Level Economics. Read the full chapter for the diagrams, worked examples and exam technique.
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