All else equal, a demand increase:
A) causes consumer surplus to increase and producer surplus to decrease.
B) causes consumer surplus to decrease and producer surplus to increase.
C) causes both consumer and producer surplus to increase.
D) causes both consumer and producer surplus to decrease.

Question

Quizplus · Accepted Answer

An increase in demand will shift the demand curve to the right, causing both consumer and producer surplus to increase. Consumers will be willing to pay a higher price, leading to an increase in producer surplus. Additionally, consumers will enjoy a larger quantity of the good, resulting in an increase in consumer surplus. All else equal, this increase in surplus for both parties is a beneficial outcome.

All Else Equal, a Demand Increase