Supply and Willingness to Accept

A seller's "willingness to accept" (W2A) is the absolute minimum amount she would take when selling a good. For example, someone selling a used car might hope to get $5000 for it but would take $4000 in a pinch. If she would sell the car for $4000 but would not sell it for $3999 or less, $4000 is her willingness to accept.

Willingness to accept crops up in auctions where it is known as the seller's "reservation price". On eBay, for example, a seller can specify a "reserve price" for an item, which is a secret minimum bid she will accept when selling the object. When bidding is below the reserve price, eBay's auction page will show "Reserve price not met" to indicate that the highest bidder to date has offered less than the minimum the seller would be willing to accept.

In general, a seller's W2A will be equal to her opportunity cost of selling the object: the amount of benefit she gives up when she hands the object over to someone else. In the example above, the seller is getting $4000 of benefits from the owning car and will give that up if she sells it. She'll need to be paid at least $4000 to hand over the keys.

The supply curve for a good is a graphical representation of the prices that individuals or firms are willingness to accept when selling the good. Conceptually, it is constructed as follows: (1) start with a low price; (2) ask all potential sellers how many items they would be willing to sell at that price; (3) mark that price and quantity on a graph; (4) increase the price slightly and repeat the process.