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What if the price of the product in question falls so much that it creates an extraordinary quantity demanded for the product? Does this affect consumer surplus?

User Tim Hovius
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Final answer:

When the price of a product falls so much that it creates an extraordinary quantity demanded, it can have an impact on consumer surplus.

Step-by-step explanation:

When the price of a product falls so much that it creates an extraordinary quantity demanded, it can have an impact on consumer surplus. Consumer surplus is the difference between what consumers are willing to pay for a product and what they actually pay.

If the price falls significantly, more consumers can afford the product and therefore the overall consumer surplus increases. For example, if the price of a new smartphone drops drastically, more people may be able to purchase it, increasing consumer surplus.

User Derui Si
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