Suppose a consumer is willing to pay a maximum of $45 for a brand of perfume whose price increases from $37 to $41 . What will be the impact of this price rise on the consumer surplus?
a. Consumer surplus will increase by $8.
b. Consumer surplus will decline by $8.
c. Consumer surplus will increase by $4.
d. Consumer surplus will decline by $4.
D
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If an economy is represented by a point inside its production possibilities curve
A) it cannot produce more of one product unless it stops producing the other product entirely. B) it cannot possibly produce more of one product, even if it produces less of another product. C) it can produce more of one product only if it produces less of another product. D) it can produce more of one product even if it does not produce less of another product.
Which of the following will be a short run impact of a pre-election expansionary fiscal policy, public expectations remaining constant?
a. An increase in unemployment b. A decline in real GDP c. An increase in real GDP d. A fall in the rate of inflation e. An economic recession