Which of the following is a key aspect regarding consumer behavior in the context of consumer surplus and willingness to pay?

• A. Willingness to pay is always equal for all consumers in a market.
• B. Consumer surplus is the difference between the market price and the cost of production.
• C. Consumers will purchase a good if their willingness to pay exceeds the market price.
• D. Consumer surplus is maximized when the market price equals the highest willingness to pay.

Answer: (C)

Verified step by step guidance

1. Understand the concept of willingness to pay (WTP): it represents the maximum amount a consumer is willing to pay for a good or service.
2. Recognize that consumer surplus is defined as the difference between a consumer's willingness to pay and the actual market price they pay, i.e., \(\text{Consumer Surplus} = \text{WTP} - \text{Market Price}\).
3. Note that consumers will only purchase a good if their willingness to pay is greater than or equal to the market price, because this ensures they gain positive or zero consumer surplus.
4. Understand that willingness to pay varies among consumers, so it is not the same for all consumers in a market.
5. Recall that consumer surplus is not related to the cost of production directly, but rather to the difference between willingness to pay and market price; also, consumer surplus is not maximized when price equals the highest willingness to pay, but rather when price is lower, allowing more consumers to gain surplus.