When consumers decide to purchase a particular product, they:

• A. base their decision solely on the producer's cost
• B. ignore the concept of consumer surplus
• C. compare the price of the product to their willingness to pay
• D. always pay more than their willingness to pay

Answer: (C)

Verified step by step guidance

1. Understand the concept of consumer surplus, which is the difference between what a consumer is willing to pay for a good and what they actually pay.
2. Recognize that consumers make purchasing decisions by comparing the market price of a product to their own willingness to pay, which reflects the maximum amount they value the product.
3. Note that consumers do not base their decision solely on the producer's cost, as this cost is more relevant to the producer's supply decisions rather than consumer behavior.
4. Acknowledge that consumers aim to maximize their utility, so they will only buy the product if the price is less than or equal to their willingness to pay, thereby gaining consumer surplus.
5. Conclude that consumers do not always pay more than their willingness to pay; instead, they pay a price that is at or below their willingness to pay to ensure a positive consumer surplus.