Question

Dawn's bridal boutique is having a sale on evening dresses. The increase in consumer surplus comes from the benefit of the lower prices to Question 43 options: only existing customers who now get lower prices on the gowns they were already planning to purchase. only new customers who enter the market because of the lower prices. both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices. Consumer surplus does not increase; it decreases.

Answer 1

Answer:

both existing customers who now get lower prices on the gowns they were already planning to purchase and new customers who enter the market because of the lower prices.

Explanation:

Consumer surplus is the difference between the willingness to pay of a consumer and the price of the good.

Consumer surplus = willingness to pay – price of the good

Let assume that the price before the sale and after the sale is $1000 and $800. The willingness to pay of customer A is $1500 and for customer b is $900

consumer surplus of customer A before sale = 1500 - 1000 = 500

consumer surplus of customer A after sale = 1500 - 800 = 700

consumer surplus of customer B before sale =  0

consumer surplus of customer B after sale = 900 - 800 = 100

consumer surplus of both customers increase