ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Consumer surplus always increases as the price of a good falls and decreases as the price of a good rises. It is depicted visually by economists as the triangular area under the demand curve between the market price and what consumers would be willing to pay.

Detailed explanation-2: -Whenever there is a surplus, the price will drop until the surplus goes away. When the surplus is eliminated, the quantity supplied just equals the quantity demanded-that is, the amount that producers want to sell exactly equals the amount that consumers want to buy.

Detailed explanation-3: -If a surplus exist, price must fall in order to entice additional quantity demanded and reduce quantity supplied until the surplus is eliminated. If a shortage exists, price must rise in order to entice additional supply and reduce quantity demanded until the shortage is eliminated.

Detailed explanation-4: -The total surplus in a market is a measure of the total wellbeing of all participants in a market. It is the sum of consumer surplus and producer surplus. Consumer surplus is the difference between willingness to pay for a good and the price that consumers actually pay for it.

Detailed explanation-5: -Which of the following is true about consumer surplus? A decrease in market price due to an increase in supply will increase consumer surplus.