Question

Ina market, the marginal buyer is the buyer

a) whose willingness to pay is higher that that of all other buyers and potential buyers.
b) whose willingness to pay is lower than that of all other buyers and potentialbuyers.
c) who is willing to buy exactly one unit of the good.
d) who would be the first to leave the market if the price were any higher.

Answer 1

The marginal buyer in a market is the one who would exit the market if prices increase even slightly, reflecting their maximum 'willingness to pay' which is pivotal for determining equilibrium prices in a perfectly competitive market.

Step-by-step explanation:

In the context of market dynamics, especially referring to perfect competition, the marginal buyer is the buyer whose willingness to pay is just equal to the current market price. More specifically, the correct answer to your question is d) who would be the first to leave the market if the price were any higher. This buyer is pivotal in determining the market equilibrium price because if the price increased even slightly, they would no longer purchase the product or service, reflecting their maximum willingness to pay.

Willingness to pay is a critical concept in understanding how buyers and sellers interact in a market. In a perfectly competitive market, where there are a large number of buyers and sellers, and the products are identical, a single seller or buyer cannot influence market prices and thus is referred to as a price taker.