Final answer:
Jerry's willingness to pay $1.50 for a 20oz coffee is the highest price he is ready to pay, not the lowest. So he would buy the coffee at this price or any lower price, reflecting his maximum willingness to pay, not minimum.
Step-by-step explanation:
If Jerry's willingness to pay for a 20oz coffee is $1.50, this indicates the maximum amount he is willing to pay for the coffee. Therefore, the correct answer is: a. It is the lowest acceptable price for him, and he would be willing to buy at any price at or below that. In economics, a person's willingness to pay for a good is the highest price they are willing to give up to obtain that good. It does not mean that $1.50 is the lowest price they will accept; it is the ceiling of what they would be willing to pay.
Understanding equilibrium price is crucial in this context. Equilibrium price is where the quantity demanded meets the quantity supplied. If Jerry's willingness to pay matches the equilibrium price, he will purchase the coffee. However, if the price were above this, say $2.00, less coffee would be purchased because consumers like Jerry would reduce their consumption or not buy at all. The same concept applies in various economic scenarios, such as the price of gasoline or pizza, which are affected by supply and demand.