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An aggregate demand curve is derived from the principle of diminishing marginal utility and it shows the amount of a good (or service) consumers would buy at different prices over some time period. Diminishing marginal utility implies that as the number of units consumed increases, the willingness to pay for additional units of that good (i.e., marginal WTP, MWTP) goes down.
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Why demand curve is negatively sloping?
The demand curve is negatively sloped to represent the declining marginal utility from consumption. At greater quantities of consumption each additional unit of a good consumed will yield relatively less utility, thereby reducing the marginal willingness to pay for that good.
How is the principle of diminishing marginal utility is related to the downward-sloping demand curve?
Diminishing marginal utility implies that, for each unit of production consumed, utility is increasing at a decreasing rate. Therefore, a consumer's greatest utility gain is always at the first unit of a good and then steadily falls to 0 as they approach infinity. A consumer's willingness to pay for a good depends on their expected utility gain, so as quantity approaches infinity, willingness-to-pay approaches 0 at a diminishing, negative rate.
Melissa buys an iPod for 100 and gets consumer surplus of 80 what is her willingness to pay?
As she has bought the item her willingness to pay is 100%
What does WTP stand for in economics?
Willingness To Pay, commonly studied alongside WTA (Willingness to Accept)
Melissa buys an ipod for 120 and gets consumer surplus of 80 what is her willingness to pay?
Her willingness to pay for the ipod would be $200. ($120 + $80)
How does marginal impact consumers' choices?
It increases their willingness to pay for one more unit of a good.
How does marginal benefit impact consumers choices?
It increases their willingness to pay for one more unit of a good.
What does 5 million each occurrence and in the aggregate mean?
The Aggregate coverage is the maximum the policy will pay out in any given policy term. .
Why demand curve is negatively sloping?
The demand curve is negatively sloped to represent the declining marginal utility from consumption. At greater quantities of consumption each additional unit of a good consumed will yield relatively less utility, thereby reducing the marginal willingness to pay for that good.
How is the principle of diminishing marginal utility is related to the downward-sloping demand curve?
Diminishing marginal utility implies that, for each unit of production consumed, utility is increasing at a decreasing rate. Therefore, a consumer's greatest utility gain is always at the first unit of a good and then steadily falls to 0 as they approach infinity. A consumer's willingness to pay for a good depends on their expected utility gain, so as quantity approaches infinity, willingness-to-pay approaches 0 at a diminishing, negative rate.
Melissa buys an iPod for 100 and gets consumer surplus of 80 what is her willingness to pay?
As she has bought the item her willingness to pay is 100%
What does WTP stand for in economics?
Willingness To Pay, commonly studied alongside WTA (Willingness to Accept)
Melissa buys an ipod for 120 and gets consumer surplus of 80 what is her willingness to pay?
Her willingness to pay for the ipod would be $200. ($120 + $80)
Which elements of pricing can be standardized?
The customer's willingness to pay
What does aggregate loan limit mean?
Aggregate loan limit is the max amount you can take out in student loans. It's like a credit card, if you max out the card, you have to pay down the principle balance before you can use that card again.
What are the advantages and disadvantage of using willingness to pay as a measure value?
ANSWER ??
What are the advantages and disadvantages of using willingness to pay as measure of value?
ANSWER ??
