Question

Why does consumer surplus decrease when price increases?

Consumers buy less of the good at a lower price.

Consumers buy less of the good at a higher price.

Consumers buy more of the good at a higher price.

Producers cannot sell as much to the consumer.

Answer 1

Answer:

Option 2 - Consumers buy less of the good at a higher price is the right option.

Explanationn:

Consumer surplus arises when the price customer pays for a product or service that is less than the price they are willing to pay.Consumer surpluses always increase when the price of a good fall and decreases when the price of a good increases. Because when a price floor is set higher than the equilibrium price, customers will have to be compelled to purchase the product at a higher value.Therefore, fewer customers will purchasethe product as a result of some will decide that utility they get from the good isn't definitely worth the value.

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