Which best describes the role of a consumer in the context of consumer surplus and willingness to pay?

• A. A consumer decides how much of a good to purchase based on their willingness to pay, aiming to maximize their consumer surplus.
• B. A consumer produces goods and sells them to maximize producer surplus.
• C. A consumer sets the market price for goods by determining the supply available.
• D. A consumer regulates the quantity of goods supplied in the market.

Answer: (A)

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 derive from it.
2. Recognize that consumer surplus is the difference between what a consumer is willing to pay for a good and what they actually pay in the market.
3. Identify that consumers make purchasing decisions by comparing their willingness to pay to the market price; they buy the good if their WTP is greater than or equal to the price.
4. Note that by purchasing goods where WTP exceeds the price, consumers maximize their consumer surplus, gaining extra benefit from the transaction.
5. Conclude that the consumer's role is to decide how much to buy based on their willingness to pay, aiming to maximize consumer surplus, rather than producing goods, setting prices, or regulating supply.