For the same fall in price,the increase in consumer surplus is greater if:

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum amount a consumer is willing to pay for a good and the actual price paid. Therefore, for the same fall in price, the increase in consumer surplus is greater for normal goods as consumers are willing to buy more of the good at a lower price. In contrast, for inferior goods, the increase in consumer surplus may not be as significant as consumers may switch to higher-quality substitute goods. Giffen goods are rare and have an upward-sloping demand curve, meaning that as the price of the good falls, consumers may buy less, leading to a smaller increase in consumer surplus. Therefore, B is the best choice.

For the Same Fall in Price,the Increase in Consumer Surplus