Is there any common method of calculating the people's willingness to pay?

Question

I'm looking to relate national habits. It can be measured by the level of income but is there any specific measure?

Answer 1

Yes. You need to measure per-capita consumption of the product in question and possibly adjust it by income level.

Answer 2

Yes and it's called "Price Elasticity of Demand".

Companies use it to work out how much they can increase their prices without losing business.

PED = % change in demand / % change in price

So if I increased prices by 5% and saw demand for my product fall by 2% the PED would be:

PED = -2% / 5% = -0.4

This tells me that in genereal, for every 1% I increase my prices I should expect a 0.4% drop in demand for that product.

For a better understanding follow this helpful link:

http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm

Answer 3

The most common is by deducting those who are unwilling to pay. Usually the higher percentage.

Answer 4

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Answer 5

an auction