When investors purchase a commodity, they believe:

• A. their willingness to pay is irrelevant to their purchasing decision
• B. the price they pay is always greater than their willingness to pay
• C. the price they pay is less than or equal to their willingness to pay
• D. the commodity has no consumer surplus

Answer: (C)

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.
2. Recognize that a rational investor or consumer will only purchase a commodity if the price they pay is less than or equal to their willingness to pay, ensuring they derive some benefit or utility from the purchase.
3. Recall that consumer surplus is defined as the difference between the willingness to pay and the actual price paid, representing the net benefit to the consumer.
4. Analyze the given options by comparing them to the economic theory: if the price paid were always greater than willingness to pay, the consumer would incur a loss and thus would not purchase the commodity.
5. Conclude that the correct statement is that the price paid is less than or equal to the willingness to pay, which allows for the possibility of consumer surplus and rational purchasing behavior.