Which of the following is considered a final good or service in the context of consumer surplus and willingness to pay?

• A. Steel used to manufacture automobiles
• B. Flour sold to a bakery
• C. Cotton purchased by a clothing manufacturer
• D. A new car purchased by a consumer

Answer: (D)

Verified step by step guidance

1. Understand the distinction between final goods and intermediate goods: Final goods are products purchased by the end consumer for personal use, while intermediate goods are used as inputs in the production of other goods.
2. Identify the examples given: Steel, flour, and cotton are all inputs used by manufacturers to produce other goods, so they are intermediate goods.
3. Recognize that a new car purchased by a consumer is the end product intended for final consumption, making it a final good.
4. Relate this to consumer surplus and willingness to pay, which apply to final goods and services because they reflect the value to the end consumer.
5. Conclude that among the options, only the new car purchased by a consumer qualifies as a final good or service in this context.