You'll have less freedom with your money if you:

• A. spend more than your willingness to pay for goods and services
• B. compare prices before making a purchase
• C. choose goods where price is less than your willingness to pay
• D. maximize your consumer surplus on every purchase

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 place on it.
2. Recognize that consumer surplus is the difference between the willingness to pay and the actual price paid, representing the extra benefit or freedom a consumer gains.
3. Analyze what happens when you spend more than your willingness to pay: you are paying more than the value you assign to the good, which reduces your consumer surplus and thus your financial freedom.
4. Compare this with other options: comparing prices helps you avoid overspending, choosing goods priced below your WTP increases consumer surplus, and maximizing consumer surplus means making purchases that give you the greatest net benefit.
5. Conclude that spending more than your willingness to pay reduces your freedom with money because it leads to a loss in consumer surplus and inefficient use of your budget.