What happens to consumer surplus if the price of a good increases?

Posted on March 25, 2010 by admin

What happens to consumer surplus if the price of a good increases?

A. It increases
B. It decreases
C. It is unchanged
D. It may increase, decrease, or remain unchanged

B. It Decreases

To get a better understanding as to why this is compare it to buying something that you really want like a new car. Say there is a one of a kind Ferrari that you would like and you are willing to pay $100,000 dollars for it, but you only end up paying $75,000. Your consumer surplus is $25,000. If the price of the goods (Ferrari) increases to $90,000, your consumer surplus is now $10,000. Hope that helps.

This entry was posted in consumer. Bookmark the permalink.

3 Responses to What happens to consumer surplus if the price of a good increases?

  1. disha says:
    March 25, 2010 at 11:03 am

    decreases
    References :

  2. JinDragon1 says:
    March 25, 2010 at 11:36 am

    B. It Decreases

    To get a better understanding as to why this is compare it to buying something that you really want like a new car. Say there is a one of a kind Ferrari that you would like and you are willing to pay $100,000 dollars for it, but you only end up paying $75,000. Your consumer surplus is $25,000. If the price of the goods (Ferrari) increases to $90,000, your consumer surplus is now $10,000. Hope that helps.
    References :

  3. G says:
    March 25, 2010 at 11:54 am

    B
    References :