Final answer:
The consumer surplus decreases when the market price of an orange increases from $0.80 to $1.05 because the surplus is the difference between what consumers are willing to pay and the actual price they pay, which shrinks as the price goes up.
Step-by-step explanation:
When the market price for an orange increases from $0.80 to $1.05, the consumer surplus decreases. This is because consumer surplus is defined as the difference between what consumers are willing to pay for a good or service and what they actually pay. So, when the price increases, consumers are paying closer to or more than what they are willing to pay, which reduces the consumer surplus.
In economic terms, consumer surplus is the area under the demand curve and above the price level for any given quantity. When the price rises, this area shrinks, leading to a decrease in consumer surplus.Impact of Price Increase on Market SurplusAs seen in Step 6 and Step 8 of the self-check questions, when barriers to trade are imposed and the price rises due to lack of imports, consumer surplus is negatively impacted as consumers pay a higher price for a lower quantity.When the market price for an orange increases from $0.80 to $1.05, the consumer surplus decreases. Consumer surplus is the difference between the price a consumer is willing to pay for a good and the actual price they pay. As the price increases, the consumer surplus decreases because consumers are paying more for the oranges and therefore getting less value.