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    Question

    An increase in the price of a product will result in

    which of the following?┬а
    A An increase in consumer surplus Correct Answer Incorrect Answer
    B A decrease in consumer surplus Correct Answer Incorrect Answer
    C No effect on consumer surplus Correct Answer Incorrect Answer
    D A decrease in producer surplus Correct Answer Incorrect 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.

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