Which of the following sets upper limit of price which a buyer is ready to pay?

Utility and Demand

The correct answer is Option (2) → Utility and Demand

Utility and demand determine how much value a buyer places on a product. The higher the utility (usefulness or satisfaction) and demand, the higher the price a buyer is willing to pay. Thus, they set the upper limit of the price.

" Pricing: Price may be defined as the amount of money paid by a buyer or received by a seller in consideration of the purchase of a product or service. Generally, if the price of a product is increased, its demand comes down, and vice-versa. Pricing is considered to be an effective competitive weapon. It is also the single most important factor affecting the revenue and profits of a firm. The factors affecting price determination are (i) Product Cost (ii) The Utility and Demand (iii) Competition (iv) Government and Legal regulations and (v) Marketing Methods Used."