Economics Consumer Surplus And Producer Surplus Questions Medium
An increase in supply has a positive impact on consumer surplus. Consumer surplus is the difference between the price consumers are willing to pay for a good or service and the actual price they pay. When supply increases, it leads to a decrease in the market price of the good or service. As a result, consumers are able to purchase the same quantity of the good at a lower price, which increases their consumer surplus.
With an increase in supply, the market equilibrium shifts, leading to a decrease in the price. This decrease in price allows consumers to enjoy a larger surplus as they can now purchase the good or service at a lower cost. Additionally, the increase in supply often leads to an expansion in the quantity available in the market, providing consumers with more options and choices.
Overall, an increase in supply benefits consumers by lowering prices, increasing their purchasing power, and expanding their consumer surplus.