Exam (elaborations)
HBX Core Economics for Managers - concepts and definitions LATEST UPDATE(100- ACCURACY)
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HBX Core Economics for Managers - concepts and definitions LATEST UPDATE(100- ACCURACY)
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HBX CoreEconomics for
Managers -
concepts and
definitions
LATEST
UPDATE(100%
ACCURACY)
WTP - answer Willingness To Pay
The maximum price you are willing to pay for
a product or service.
,Irrationality - answer Paying more than WTP
Actual Value - answer = WTP
Intrinsic vs. Extrinsic Differences - answer
Differences in consumer WTP that arise from
differences in, say, age, gender, income, or
education are what we call "extrinsic" or
"observable" differences.
Other differences are "intrinsic"—things that
you couldn't know about a person without
asking him or her. They're hard to observe
(and for that reason are also referred to as
"unobserved differences"). For example, a
person's tolerance for risk, his or her wish to
fit in with others or stand out from others,
etc.
Does a sale affect WTP? - answer No
What does each axis of the demand curve
show? - answer Cumulative quantity on x-axis
, Price on y-axis
How is revenue represented on a demand
curve? - answer The rectangle under the
demand curve.
Price × Number of Consumers
How does demand curve shift based on WTP?
- answer Increased WTP = rightward shift
Decreased WTP = leftward shift
Price does *not* affect WTP or shift demand
curve.
Diminishing Marginal Returns - answer If
buying more than one of a specific item,
generally, people are willing to pay less for
the second item, even less for the third, etc.
For example, this is why buying in bulk is
often cheaper than buying individual
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