Glossary · Micro · Market analysis and welfare

Willingness to pay

The most a buyer would hand over for a unit of a good. The demand curve is a ranking of willingness to pay from highest to lowest, and the gap between it and the price is consumer surplus.

Also called: WTP, reservation price

Taught in: Consumer Surplus

Related terms

Consumer surplus Demand curve

More from market analysis and welfare

Allocative efficiency Deadweight loss (DWL)Market failure Negative externality Price ceiling Price floor Producer surplus

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