Which of the following is true about consumer surplus?
A)Consumer surplus is how much more consumers have to pay than they are willing to pay.
B)Consumer surplus is shown graphically as the area under the demand curve but above the supply curve.
C)An increase in the market price due to a decrease in supply will increase consumer surplus.
D)A decrease in market price due to an increase in supply will increase consumer surplus.

Question

Which of the following is true about consumer surplus?​
A)​Consumer surplus is how much more consumers have to pay than they are willing to pay.
B)​Consumer surplus is shown graphically as the area under the demand curve but above the supply curve.
C)​An increase in the market price due to a decrease in supply will increase consumer surplus.
D)​A decrease in market price due to an increase in supply will increase consumer surplus.

Quizplus · Accepted Answer

Consumer surplus is the difference between what a consumer is willing to pay for a good or service and the actual market price they pay. Therefore, if there is a decrease in market price due to an increase in supply, consumers will be able to purchase the good or service at a lower price than they were willing to pay, which increases consumer surplus. Choice A is incorrect because consumers do not pay more than they are willing to pay, but rather pay what they are willing to pay or less. Choice B is partially correct, as the area under the demand curve but above the market price represents consumer surplus. However, it is not the only way to show consumer surplus graphically. Choice C is incorrect because an increase in market price decreases consumer surplus.

Which of the Following Is True About Consumer Surplus?​

Which of the Following Is True About Consumer Surplus?