The greater the discrepancy between a consumer's needy state and the desired state, the greater the:

• A. producer surplus
• B. market equilibrium price
• C. deadweight loss
• D. willingness to pay

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of 'needy state' and 'desired state' in consumer behavior. The needy state represents the consumer's current level of satisfaction or utility, while the desired state is the level of satisfaction the consumer aims to achieve.
2. Step 2: Recognize that the discrepancy between these two states reflects how much a consumer values moving from their current state to the desired state. This valuation is captured by the consumer's willingness to pay (WTP) for a good or service that helps bridge this gap.
3. Step 3: Recall that willingness to pay is the maximum amount a consumer is ready to pay to obtain a good or service that increases their utility from the needy state to the desired state.
4. Step 4: Understand that a larger discrepancy means the consumer perceives a higher benefit from the good or service, which increases their willingness to pay.
5. Step 5: Conclude that among the options given, the correct concept linked to the discrepancy between needy and desired states is the willingness to pay, as it directly measures the consumer's valuation of the improvement in their utility.