Hi,

I understand the WTP very well (I think I do) but whenever I have question about it. I can't understand it.

I need help in this topic .. maybe steps or logical thinking on how to answer such Qs

example below.. I couldn't answer these two Qs . what is it that I am missing

A second customer enters the bakery, where cupcakes are being sold, as before, for $3 per individual cupcake and $30 per box of 12 cupcakes. This customer purchases 15 cupcakes1 box for $30, and 3 individual cupcakes for $3 each. Which of the following must be true of the customer's willingness to pay?

• The customer would not have purchased the cupcakes if the price for all 15 had been $45.

The customer may have a very high willingness to pay for 15 cupcakes, but took advantage of the 12 for $30 deal.

• The customer's willingness to pay for the 15 cupcakes is $39.

The customer is willing to pay at least $39 for 15 cupcakes, but may be willing to pay more.

• The customer's willingness to pay for 12 cupcakes is $30.

The customer may be willing to pay more than the price of the cupcakes.

• The customer's willingness to pay for 16 cupcakes is less than $42.

If the customer were willing to pay $42 or more for 16 cupcakes, an additional cupcake would have been purchased for an additional $3.

Next Question

A bakery sells individual cupcakes for $3, and boxes of 12 cupcakes for $30. A customer enters the bakery and purchases 4 cupcakes. Which of the following statements must be true of the customer's willingness to pay?

• The customer's willingness to pay for 6 cupcakes is less than $15.

The customer's willingness to pay for 6 cupcakes must be less than $18, but it could be more than $15.

• The customer's willingness to pay for 5 cupcakes is less than $15.

The customer had the option to purchase 5 individual cupcakes for $15. Since the 5th cupcake was not purchased, the customer's willingness to - - pay for 5 cupcakes must be less than $15.

• The customer's willingness to pay for a 5th cupcake is $0.

The customer's willingness to pay for the 5th cupcake must be less than $3, but could be more than $0.

• The customer's willingness to pay for 12 cupcakes is at least $36.

If the customer were willing to pay $36 or more for a dozen cupcakes, the customer would have purchased a box of 12 cupcakes for $30.