What Happens to Consumer Surplus as Price Falls Along a Given

question 106

Multiple Choice

What happens to consumer surplus as price falls along a given demand curve?

• A)It always increases.
• B)It always decreases.
• C)It never changes.
• D)It increases only if price increases just a little.
• E)It depends on the elasticity of demand and supply.

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Definitions:

Opportunity Cost

The cost of forgoing the next best alternative when a choice is made, representing the benefits one misses out on.

Comparative Advantage

The ability of an individual or entity to produce a good or service at a lower opportunity cost than others.

Absolute Advantage

The ability of a country, individual, or group to produce a good or service more efficiently than another entity, using fewer resources.

Car Wash

A facility used to clean the exterior and, sometimes, the interior of motor vehicles.