Final answer:
When the market price of an apple increases from $1.40 to $1.60, the consumer surplus decreases because consumers have to pay more for each unit, leaving them with less surplus.
Step-by-step explanation:
When the market price of an apple increases from $1.40 to $1.60, the consumer surplus generally decreases. The consumer surplus represents the difference between what consumers are willing to pay for a good and what they actually pay. At a higher price, less surplus remains for consumers as they have to pay more for each unit of the good, assuming all else remains constant.
To further explain, let's consider the economic model of demand and supply. The area above the price level and below the demand curve represents the consumer surplus; when the price increases, this area shrinks. For example, if the original equilibrium price of a product is at a lower level and quantity demanded at that price is higher, moving to a higher price reduces quantity demanded, thereby reducing consumer surplus.
This is depicted in various economics models, such as the imposition of a price ceiling or price floor, or the introduction of trade barriers that lead to a higher domestic price.
Additionally, these outcomes can be analyzed using the concept of ceteris paribus, which means 'other things being equal.' It allows for the isolation of one effect, in this case the price change, to see its direct impact on consumer surplus without interference from other factors. With the price of an apple going up, consumers' ability to benefit from purchasing at a lower price is diminished, and thus consumer surplus is reduced.