Question

Which of the following will cause an increase in consumer surplus?

a. an increase in the production cost of the good
b. a technological improvement in the production of the good
c. a decrease in the number of sellers of the good
d. An increase in wages for the workers that produce the good

Answer 1

An improvement in technology and an increase in the number of sellers of the good will cause an increase in consumer surplus, while an increase in wages for workers will decrease consumer surplus.

Step-by-step explanation:

An improvement in technology that reduces the cost of production will cause an increase in supply. This can be shown as a rightward shift in the supply curve.

An increase in the number of sellers of the good will also cause an increase in supply, shifting the supply curve to the right. More sellers means more quantity supplied at each price level.

An increase in wages for the workers that produce the good will cause an increase in production cost and therefore a decrease in supply, shifting the supply curve to the left. Higher wages mean higher costs, leading to a decrease in the quantity supplied at each price level.