Which of the following best describes a common benefit of purchasing a good or service from a specialty retailer in terms of consumer surplus and willingness to pay?

• A. Consumers always pay less than their willingness to pay at specialty retailers, resulting in zero consumer surplus.
• B. Specialty retailers typically reduce consumer surplus by charging prices above consumers' willingness to pay.
• C. Purchasing from a specialty retailer eliminates consumer surplus because all consumers pay the same price.
• D. Consumers may experience higher consumer surplus because specialty retailers often offer products that closely match their preferences, increasing their willingness to pay.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of consumer surplus, which is the difference between what a consumer is willing to pay for a good or service and the actual price they pay.
2. Step 2: Recognize that willingness to pay varies among consumers based on their preferences and the value they place on the product.
3. Step 3: Consider that specialty retailers often offer products that are tailored or closely matched to specific consumer preferences, which can increase a consumer's willingness to pay for those products.
4. Step 4: Analyze how a closer match between product and preference can lead to a higher willingness to pay, while the price may remain the same or only slightly higher, thus increasing consumer surplus.
5. Step 5: Conclude that purchasing from specialty retailers can increase consumer surplus because consumers derive more value (higher willingness to pay) from products that better meet their needs, compared to more generic options.