Answer to Question #48094 in Microeconomics for Sarah

Question

The increase in consumer surplus from a price decrease is equal to the price difference multiplied by the new quantity.
True, False or Uncertain...Explain.

Answer 1

A consumer surplus occurs when the consumer is willing to pay more for a given product than the current market price.
The increase in consumer surplus from a price decrease will have will be a rectangle with the sides of price difference and the old quantity, so the statement is false.