Final answer:
Consumer surplus decreases when the price of a good increases because consumers end up buying less of that good at the higher price, thereby reducing the difference between their willingness to pay and the actual price paid.
Step-by-step explanation:
Consumer surplus decreases when price increases because b. Consumers buy less of the good at a higher price. When barriers to trade are imposed and the price rises to PNoTrade, the behavior illustrated in economics assumes that less quantity of the good is demanded by consumers because of the higher price. The consumer surplus, which represents the difference between what consumers are willing to pay (based on their preferences) and what they actually pay, diminishes as consumers pay a higher price and receive a lower quantity.
At a new higher price, the quantity demanded (Q) is lower than at the market equilibrium price (Qd). This leads to a reduction in the consumer surplus, which can be visualized as the area shrinking to the triangle PNoTrade, E, and B. Conversely, producer surplus, which is the difference between the market price and what producers would be willing to accept, increases because producers can sell a higher quantity at this increased price, as indicated by the larger area of the triangle PNoTrade, E, and D.