Final answer:
Consumers might pay more for better service if the perceived utility justifies the expense, with specific increases like the Netflix price hike exemplifying dramatic shifts in cost. Additionally, inflation affects pricing and consumers' willingness to pay more over time.
Step-by-step explanation:
The question of how much extra consumers are willing to pay for better service does not have a single answer as it can vary widely based on the product, market conditions, and individual preferences. However, examples like the Netflix price hike in 2011, where customers faced a 60% price increase to retain the same service, show that significant cost upticks can happen if a company changes its pricing strategy. The concept of utility and marginal comparisons help in understanding why consumers may be willing to pay more. If a customer perceives that the additional cost of a product or service will bring them significantly more satisfaction or utility, they might decide it's worth the expense. Inflation also plays a role in changing prices, as the purchasing power of a dollar declines over time, meaning what $1 could buy in 1970 is far less than what it can in more recent years due to the general rise in the level of all prices.