When you are deciding what to buy, you should:

• A. Purchase only goods that are advertised.
• B. Compare the price of the good to your willingness to pay for it.
• C. Always choose the good with the lowest price.
• D. Buy any good that is available, regardless of its price.

Answer: (B)

Verified step by step guidance

1. Understand the concept of 'willingness to pay' (WTP), which is the maximum amount a consumer is ready to pay for a good or service based on the value they expect to receive from it.
2. Recognize that rational consumers aim to maximize their utility, meaning they will only purchase a good if the price is less than or equal to their willingness to pay.
3. Compare the price of the good to your willingness to pay: if the price is lower than or equal to your WTP, purchasing the good increases your consumer surplus and is beneficial.
4. Avoid making decisions based solely on advertising, lowest price, or availability without considering your personal valuation of the good, as these do not guarantee utility maximization.
5. Conclude that the best decision rule is to purchase only those goods for which your willingness to pay is at least as high as the price, ensuring you get value from your purchase.