If the Cost of Producing Sofas Decreases,then Consumer Surplus in the Sofa

question 63

Multiple Choice

If the cost of producing sofas decreases,then consumer surplus in the sofa market will

• A)increase.
• B)decrease.
• C)remain constant.
• D)increase for some buyers and decrease for other buyers.

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Definitions:

Price Floor

A government- or body-imposed price control or limit on how low a price can be charged for a product.

Surplus

The situation in which the quantity supplied of a product exceeds the quantity demanded at the current price.

Law of Supply

A fundamental principle of economics that states that, all else equal, an increase in price results in an increase in the quantity supplied, and vice versa.

Law of Demand

States that, all else being equal, as the price of a product decreases, the quantity demanded of the product will increase, and vice versa.