EC238 Chapter Notes - Chapter 3: Technological Change, Aggregate Demand, Demand Curve
Document Summary
The more wealthy a person is, the better they can afford to pay for various goods and services. Willingness to pay (wtp) also reflects ability to pay. As the number of units consumed increases, the wtp for additional units of that good normally declines. Marginal wtp describes the additional willingness to pay of a person for one more unit of a good or service. Total wtp for a given consumption level refers to the total amount a person would be willing to pay to attain that consumption level rather than go without the good entirely. Total wtp is measured as the area under the wtp schedule from zero to the amount to be consumed. An individual demand curve shows the quantity of a good or service that the individual in question would demand at any particular price. A linear demand relationship implies a uniform change in the quantity demanded as the price of the good changes.
