In the context of consumer surplus and willingness to pay, what term describes the ability of buyers to influence the price they must pay for a good or service?

• A. Market power
• B. Consumer surplus
• C. Producer surplus
• D. Price elasticity of demand

Answer: (A)

Verified step by step guidance

1. Understand the concept of willingness to pay, which is the maximum price a buyer is ready to pay for a good or service.
2. Recognize that consumer surplus is the difference between what consumers are willing to pay and what they actually pay, but it does not describe the ability to influence price.
3. Know that producer surplus relates to sellers' benefits and is not about buyers' influence on price.
4. Recall that price elasticity of demand measures how quantity demanded responds to price changes, not the ability to influence price.
5. Identify that the term describing buyers' ability to influence the price they pay is 'market power', which refers to the capacity of buyers or sellers to affect market prices.