Which of the following is a true statement about travel that has both business and personal aspects in the context of consumer surplus and willingness to pay?

• A. Personal aspects of travel are irrelevant when determining willingness to pay.
• B. Consumer surplus is always zero for trips that combine business and personal purposes.
• C. The total willingness to pay for the trip is the sum of the willingness to pay for the business and personal components.
• D. Business travel never affects the calculation of consumer surplus.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of willingness to pay (WTP). WTP represents the maximum amount a consumer is willing to pay for a good or service, reflecting the value they place on it.
2. Step 2: Recognize that when a trip has both business and personal components, the total value or benefit derived from the trip is composed of both parts. Therefore, the total willingness to pay should consider both the business and personal values.
3. Step 3: Recall that consumer surplus is the difference between the willingness to pay and the actual cost paid. It is not necessarily zero for trips with mixed purposes; it depends on the relationship between WTP and cost.
4. Step 4: Evaluate each statement by applying these principles: personal aspects are relevant to WTP, consumer surplus can be positive or zero, and business travel influences consumer surplus calculations.
5. Step 5: Conclude that the correct statement is that the total willingness to pay for the trip is the sum of the willingness to pay for the business and personal components, as this reflects the combined value of both aspects.