Which of the following is true regarding value in the context of consumer surplus and willingness to pay?

• A. Value is unrelated to consumer preferences.
• B. Value is determined solely by the cost of production.
• C. Value is always equal to the market price of a good.
• D. Value to a consumer is measured by the maximum amount they are willing to pay for a good or service.

Answer: (D)

Verified step by step guidance

1. Understand the concept of 'value' in microeconomics, which relates to how much a consumer values a good or service based on their preferences and willingness to pay.
2. Recognize that consumer surplus is the difference between the maximum amount a consumer is willing to pay (their value) and the actual market price they pay.
3. Note that value is not determined by the cost of production; instead, it is subjective and varies across consumers depending on their preferences.
4. Understand that value is not always equal to the market price because market price is influenced by supply and demand, while value reflects individual willingness to pay.
5. Conclude that the correct interpretation of value in this context is the maximum amount a consumer is willing to pay for a good or service, which directly relates to consumer surplus.