A consumers maximum willingness-to-pay, B, reflects the consumers tastes and his/ her income or wealth constraintsthat is,

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A consumer’s maximum willingness-to-pay, B, reflects the consumer’s tastes and his/

her income or wealth constraints—that is, one consumer may have a higher willingnessto-

pay for a good than another consumer because he/she “likes” the good more (e.g., because of its attributes or performance) or because he/she has more disposable income than the other consumer, or because of some combination of both taste and income differences. From a company’s perspective, does it matter whether differences in B across potential consumers is primarily driven by differences in taste or differences in income?

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Economics Of Strategy

ISBN: 9781119378761

7th Edition

Authors: David Besanko, David Dranove, Mark Shanley, Scott Schaefer

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