[This is part of the series: The Complete Guide To Economics 101.]
What does willingness to pay mean?
Willingness To Pay is a term in economics that refers to the maximum amount that a customer will pay for a particular good or service.
This is obviously completely subjective, and varies in regard to both place and time.
A few examples:
- On a given day I might be willing to pay $2.00 for a Coke.
- In the 100 degree heat of attending a college football game, I might be willing to pay $8.00 for a Coke.
- $2.00 is about the most I will pay for a cup of coffee, except on vacation where I will pay $6.00.
- When I was in college, I would be willing to pay $25 for a nice meal. Now I will pay $50.
