Asked by Kristen Buehler on May 02, 2024
Verified
Along a straight-line downward-sloping demand curve,a decrease in the market price of a good:
A) will cause no change in consumer surplus.
B) will increase consumer surplus.
C) will decrease consumer surplus.
D) may either decrease or increase consumer surplus.
Downward-Sloping Demand
A market situation in which the quantity demanded of a good or service decreases as its price increases, depicting an inverse relationship between price and demand.
Consumer Surplus
The difference between the total amount that consumers are willing and able to pay for a good or service versus what they actually pay.
- Understand the influence of price variations on the surplus of consumers and producers.
Verified Answer
MD
Monae DenishMay 08, 2024
Final Answer :
B
Explanation :
Along a straight-line downward-sloping demand curve, a decrease in market price of a good increases consumer surplus. This is because buyers who were willing to pay the higher initial price get to buy the good at a lower price, which results in greater consumer surplus. Only choice B acknowledges this fact.
Learning Objectives
- Understand the influence of price variations on the surplus of consumers and producers.
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