Question

what happens when the price of a good increases holding everything else constant? producer surplus decreases consumer surplus decreases producer and consumer surplus are unchanged consumer surplus increases g

Answer 1

Consumer surplus drops when a good's price rises while keeping everything else constant.

What is consumer surplus ?

Consumer surplus is a financial estimate of the benefits that consumers receive from market competition. When customers pay less for a good or service than they would be willing to, this is known as consumer surplus.It measures the extra benefit that consumers get from paying less for something than they would have been prepared to.

In order to quantify the social advantages of public goods like national highways, canals, and bridges, the idea of consumer surplus was created in 1844. It has been a crucial tool for welfare economics research and government tax policy development.

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