If no consumer surplus exists in a market, it is possible for a firm to earn greater profits.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. If no consumer surplus exists, it means consumers are paying the maximum they are willing to pay, leaving no room for a firm to increase prices without reducing demand, thus not necessarily leading to greater profits.

If No Consumer Surplus Exists in a Market, It Is