If the cost of producing automobiles increases, consumer surplus will:
A)increase
B)decrease
C)remain constant
D)increase, then decrease

Question

Quizplus · Accepted Answer

When the cost of producing automobiles increases, the seller's supply will decrease leading to an increase in the price of automobiles. This will result in a decrease in consumer surplus as consumers will have to pay more for the same product, reducing the difference between the maximum amount they are willing to pay and the price they actually pay.

If the Cost of Producing Automobiles Increases, Consumer Surplus Will