Section B. Question 1 WILLINGNESS TO PAY PRINCIPLE - SECTION B QUESTION 1 WILLINGNESS TO PAY PRINCIPLE Economists measure preferences of

Section B. Question 1 WILLINGNESS TO PAY PRINCIPLE -...

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SECTION BQUESTION 1WILLINGNESS TO PAY PRINCIPLEEconomists measure preferences of individuals as behaviourally measurable"willingness-to-pay" ("wtp") and then use these prices as a guide to the welfareindividual consumers seek. In this case, consumers will signal their preference forthis commodity and the individual welfare associated with it for paying for thiscommodity, while balancing the unit price against all of the other preferences theyhave. These preferences are revealedin the purchase of commoditiesWhile economists are most comfortable when their estimates of price values arerevealed in actual behaviours, either direct or indirect, they also recognize that thereare many things of value — especially natural systems and their parts — that areseldom traded in markets. Techniques can involve bidding games, interviews,questionnaires, etc., and their purpose is to represent the wtp value of commodities,such as improved views in a national park . Economists have thus greatly expanded

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