A reduction in the price of a commodity due to an increase in supply will:
A) increase consumer surplus.
B) reduce consumer surplus.
C) leave consumer surplus unchanged.
D) cause the demand curve to shift to the right.
E) not change producer surplus.

Question

Quizplus · Accepted Answer

An increase in supply, leading to a reduction in price, typically increases consumer surplus because consumers can now buy the same quantity of the commodity at a lower price or more of the commodity for the same expenditure, thus increasing the difference between what they are willing to pay and what they actually pay.

A Reduction in the Price of a Commodity Due to an Increase