Asked by Yesenia Lazarte on May 26, 2024

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Suppose there is an increase in supply that reduces market price. Consumer surplus increases because (1) consumer surplus received by existing buyers increases and (2) new buyers enter the market.

Consumer Surplus

The discrepancy in the total spend consumers are willing to shoulder for a product or service as opposed to what they actually disburse.

Market Price

The present value at which a service or asset is available for purchase or sale in a market.

  • Gain insight into the notion and determination of consumer surplus.
  • Understand the influence of market dynamics (supply and demand) on consumer surplus.
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Marian MikhailMay 26, 2024
Final Answer :
True
Explanation :
An increase in supply typically lowers the market price, making goods or services cheaper for consumers. This not only increases the consumer surplus for existing buyers (since they're getting more value for a lower price) but also allows new buyers to enter the market, further increasing the overall consumer surplus.