For a perfectly competitive market in which firms face an identical constant marginal costs, the amount of consumer surplus increases if

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Quizplus · Accepted Answer

In a perfectly competitive market, the consumer surplus is maximized when the market is in equilibrium where marginal cost equals marginal revenue. An increase in market demand while marginal cost remains constant shifts the equilibrium price up, resulting in consumers paying a lower price than they would under the initial equilibrium. This leads to an increase in consumer surplus.

For a Perfectly Competitive Market in Which Firms Face an Identical