how does a consumer value the cost of the product

Expert Solution

A consumer values the cost of a good based on numerous factors, most important one being the utility it derives from it. Utility is the amount of satisfaction a person derives from the consumption or usage of a certain good. Higher the utility, higher the person will value it. Almost the entire valuing of the good process revolves around utility. Higher the utility derived from a product, higher the person will value it. The next term which comes is the consumers willingness to pay. It is the amount a consumer is willing to give for a product. It depends again on the utility. Now utility derived from a product depends on a number of factors, like the number of uses that product can be put into, or whether it is a normal good or complementary good. Just like the above said variables, there are many other variables, based on which a person derives utility from a product, which in turn helps him in valuing a product.

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Rahul Sunny answered 1 year ago

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