All else being equal, a demand increase:
A) causes consumer surplus to increase and producer surplus to decrease.
B) causes consumer surplus to decrease and producer surplus to increase.
C) causes both consumer and producer surplus to increase.
D) causes both consumer and producer surplus to decrease.

Question

Quizplus · Accepted Answer

An increase in demand typically leads to higher equilibrium prices and quantities, benefiting both consumers and producers by increasing the area of consumer and producer surplus respectively. Consumers benefit from more goods being available that they value more than the cost, and producers benefit from selling more goods at higher prices.

All Else Being Equal, a Demand Increase