Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Consumer surplus always decreases
B
Consumer surplus remains unchanged
C
Consumer surplus increases
D
Consumer surplus becomes negative
Understanding the Answer
Let's break down why this is correct
Answer
In a competitive market, when the demand curve shifts to the right, it means that more consumers want to buy a product at every price level. This increase in demand often leads to higher prices, as sellers respond to the greater interest. Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. When the demand increases, some consumers may still buy the product at the old price, which gives them a larger consumer surplus. For example, if the price of a popular toy rises but more people are willing to buy it, those who still purchase it at the previous lower price enjoy a greater surplus, reflecting the extra benefit they receive from paying less than what they would be willing to pay.
Detailed Explanation
When demand increases, more people want to buy a product. Other options are incorrect because Some might think that consumer surplus always goes down when demand changes; It's a common mistake to think that changes in demand don't affect consumer surplus.
Key Concepts
Demand curve
Consumer surplus
Topic
Market Structures Overview
Difficulty
medium level question
Cognitive Level
understand
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