Which of the following is a question that product and demand tracking is able to answer in the context of consumer surplus and willingness to pay?

• A. How many suppliers are present in the market?
• B. What is the equilibrium price set by the government?
• C. How much are consumers willing to pay for a product?
• D. What is the total cost of production for the firm?

Answer: (C)

Verified step by step guidance

1. Understand the concepts involved: Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. Willingness to pay refers to the maximum amount a consumer is ready to pay for a product.
2. Recognize that product and demand tracking involves monitoring consumer behavior, preferences, and purchasing patterns, which helps estimate how much consumers value a product.
3. Identify that questions about the number of suppliers or government-set prices relate to market structure or policy, not directly to consumer surplus or willingness to pay.
4. Note that total cost of production is a supply-side concept, focusing on the firm's expenses, and is unrelated to consumer willingness to pay.
5. Conclude that product and demand tracking can answer questions about how much consumers are willing to pay for a product, as it directly relates to measuring consumer valuation and surplus.