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**MCQ:** If the price decreases from $3 to $1, then consumer surplus increases by?

A. $55
B. $60
C. $40

Answer :

Final answer:

Consumer surplus increases by $3 when the price decreases from $3 to $1.


Explanation:

Consumer surplus is the difference between what consumers are willing to pay for a product and what they actually pay. It represents the benefit that consumers receive from a purchase. To calculate the change in consumer surplus, we need to find the area of the triangle formed by the original consumer surplus and the new consumer surplus.

In this case, the original price was $3 and the new price is $1. The original consumer surplus is the area below the demand curve and above the original price line, which is (1/2) * (3-1) * (5-3) = 1. The new consumer surplus is the area below the demand curve and above the new price line, which is (1/2) * (3-1) * (5-1) = 4. Therefore, the increase in consumer surplus is $4 - $1 = $3.


Learn more about Consumer surplus here:

https://brainly.com/question/34926592


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