Holding all else constant,when the price of a good decreases
A) producer surplus increases.
B) consumer surplus increases.
C) both consumer surplus and producer surplus increase.
D) consumer surplus decreases.
E) both consumer surplus and producer surplus decrease.

Question

Quizplus · Accepted Answer

When the price of a good decreases, consumers are able to purchase the same quantity of the good for a lower price, which increases their consumer surplus. Producer surplus, on the other hand, decreases as they receive less revenue for each unit sold. Therefore, option B is the best choice.

Holding All Else Constant,when the Price of a Good Decreases