Refer to the figure below.If the supply curve returns to its initial level of S_a,the amount of consumer surplus will return to its original level. A) True B) False C) Uncertain

Question

Quizplus · Accepted Answer

If the supply curve returns to its initial level of S_a, the market equilibrium price will also return to its original level, which means that the quantity demanded will once again equal the quantity supplied at that price. As a result, the same quantity of goods will be purchased at the same price as before the supply curve shifted. Since consumer surplus is the difference between the maximum price consumers are willing to pay and the actual price they pay, the consumer surplus will return to its original level as well. Therefore, the statement is true.

Refer to the Figure Below