ECN437DemandWillingnesstoPayandMarginalBenefits

ECN437DemandWillingnesstoPayandMarginalBenefits - ECN437

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ECN437 Demand, Willingness to Pay and  Marginal Benefits The market demand curve for a good originates from what individuals are  willing to pay (W2P) for the good. Conceptually, it is constructed as  follows: (1) start with a  high  price; (2) ask all potential buyers how many  items they would be willing to buy at that price; (3) make a note of that  price and quantity; (4) decrease the price slightly and repeat the process.  The example below shows the steps in detail. A person's willingness to pay for something shows the dollar value she  attaches to it. Her willingness to pay for one more unit of a good is thus a  dollar measure of the benefits the extra unit of the good gives her. As a  result, the terms "willingness to pay" and "marginal benefit" are often used  interchangably. Willingness to Pay and Individual Demand
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This note was uploaded on 04/03/2012 for the course ECN 437 taught by Professor Peterwilcoxen during the Spring '12 term at Syracuse.

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ECN437DemandWillingnesstoPayandMarginalBenefits - ECN437

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