The cost of producing digital cameras decreases.As a result, the consumer surplus associated with digital cameras:
A)decreases
B)increases
C)doesn't change
D)could increase or decrease but the overall effect is ambiguous

Question

Quizplus · Accepted Answer

When the cost of production decreases, the price of digital cameras is likely to decrease. This decrease in price would lead to an increase in consumer surplus, as consumers would be able to purchase the cameras at a lower price than previously possible. Therefore, the consumer surplus associated with digital cameras would increase.

The Cost of Producing Digital Cameras Decreases