When deciding whether to purchase a product, what should consumers consider regarding its price?

• A. Whether the price is less than or equal to their willingness to pay
• B. Whether the price is higher than the producer's cost
• C. Whether the price is set by the government
• D. Whether the price is the same as last year

Answer: (A)

Verified step by step guidance

1. Understand the concept of 'willingness to pay' (WTP), which represents the maximum amount a consumer is ready to pay for a product based on the value they expect to receive from it.
2. Recognize that a consumer will consider purchasing a product only if the price is less than or equal to their willingness to pay, ensuring that the benefit they get is at least as great as the cost they incur.
3. Note that the producer's cost, government price setting, or price comparisons to previous years are generally not the primary factors for an individual consumer's purchase decision; these factors may influence market prices but do not directly determine a consumer's choice.
4. Formulate the decision rule for the consumer as: purchase if and only if \(\text{Price} \leq \text{Willingness to Pay}\).
5. Conclude that the key consideration for consumers regarding price is whether it is less than or equal to their willingness to pay, as this ensures the purchase provides them with non-negative consumer surplus.