What term describes the maximum price a buyer is willing to pay for a good?

The correct term that describes the maximum price a buyer is willing to pay for a good is "Willingness to Pay." This concept reflects the highest amount a consumer values the good, which influences their purchasing decisions. It is an essential concept in understanding consumer behavior and demand in economics, as it sets the upper limit on the price that consumers are ready to spend. If a seller sets a price below this level, the buyer perceives the good as a bargain, leading to a potential purchase.

In contrast, consumer surplus refers to the difference between what consumers are willing to pay and what they actually pay; diminishing returns relates to the decrease in additional output resulting from an increase in one input while keeping others constant, and supply price typically refers to the minimum price suppliers are willing to accept for a good. Understanding willingness to pay helps analyze market dynamics, consumer satisfaction, and the overall effectiveness of pricing strategies.