An increase in the price of a product will result in
which of the following?
AAn increase in consumer surplusCorrect AnswerIncorrect Answer
BA decrease in consumer surplusCorrect AnswerIncorrect Answer
CNo effect on consumer surplusCorrect AnswerIncorrect Answer
DA decrease in producer surplusCorrect AnswerIncorrect Answer
Solution
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. As prices increase, consumer surplus decreases because consumers pay more for the same quantity of goods.