Question 1If the price of a good falls while demand remains unchanged, then total consumer surplus will ____________.1 pointremain unchangedincreasedecreaseWe can’t say.
Question
Question 1If the price of a good falls while demand remains unchanged, then total consumer surplus will ____________.1 pointremain unchangedincreasedecreaseWe can’t say.
Solution
The total consumer surplus will increase.
Here's why:
Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. When the price of a good falls, consumers who were willing to pay the higher price now pay less, increasing their individual consumer surplus.
In addition, the lower price may allow some consumers who were previously unwilling or unable to purchase the good at the higher price to now purchase it, further increasing the total consumer surplus.
So, when the price of a good falls while demand remains unchanged, the total consumer surplus increases.
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