University of Phoenix Material

Economics and the Environment Worksheet

Respond to each question with a minimum of 150 words.

.1 What is willingness to pay? How does this relate to the concept of demand?

In a market economy, dollars (or some other currency) are a universally accepted measure of economic value, because the number of dollars that a person is willing to pay for something tells how much of all other goods and services they are willing to give up to get that item. This is often referred to as willingness to pay. In general, when the price of a good increases, people will purchase less of that good. This is referred to as the law of demandpeople demand less of something when it is more expensive (assuming prices of other goods and peoples incomes have not...