Answer to Question #309509 in Microeconomics for Mali ☺️

Question

Suppose the demand for french bread rises what happens to the consumer surplus

Answer 1

Consumer surplus is the economic measure of the consumers excess benefit. It is the difference between the consumer’s willingness to pay for a product and the equilibrium price. A surplus occurs when the consumers are willing to pay a higher price for a product than the equilibrium price.

An increase in the demand will shift the demand curve to the right and lead to an increase in both equilibrium price and quantity. This will thus lead to a reduction in the consumer surplus as consumers will be less willing to pay an higher price than the increased price.