Question

The difference between the customer's willingness to pay for a product and the target price is...

The difference between the customer's willingness to pay for a product and the target price is the:

Group of answer choices

Value Communications Gap

Price Structure Gap

Price Execution Gap

Total surplus

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Homework Answers

Answer #1

The customer has a maximum willingness to pay depending on what the customer values the product. If the price is beyond that, then the customer will not be buying that product.

However if the price is lower than the perceived value of the product, then the customer buys the product. So producers tend to make the price as high as possible but not beyond the maximum willingness to pay of the customer. The difference between the perceived value and what the customer pays is the total benefits obtained by the customer. It is also known as the total surplus.

So the correct option is

Total surplus

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