In the context of consumer surplus and willingness to pay, which statement best describes the projected growth in buyer demand for private-label athletic footwear?

• A. It is determined by the difference between consumers' willingness to pay and the market price.
• B. It is solely influenced by the cost of production for private-label footwear.
• C. It is unaffected by changes in the price of branded athletic footwear.
• D. It remains constant regardless of changes in consumer preferences.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of consumer surplus, which is the difference between what consumers are willing to pay for a good and the actual market price they pay.
2. Step 2: Recognize that buyer demand for a product, such as private-label athletic footwear, depends on consumers' willingness to pay relative to the market price; if willingness to pay exceeds the price, demand tends to increase.
3. Step 3: Analyze why cost of production alone does not determine buyer demand, as demand is driven by consumer preferences and willingness to pay rather than production costs.
4. Step 4: Consider how changes in the price of branded athletic footwear can affect the demand for private-label alternatives, since consumers may switch based on relative prices and perceived value.
5. Step 5: Note that demand is not constant and can change with shifts in consumer preferences, prices, and willingness to pay, making it dynamic rather than fixed.