Final answer:
An increase in supply in a free market leads to a lower equilibrium price and higher quantity, which actually increases consumer surplus, contrary to decreasing or eliminating it.
Step-by-step explanation:
If a market is allowed to move freely to its equilibrium price and quantity, then an increase in supply will lower the equilibrium price and increase the quantity. An increase in supply typically means that more of the good or service is available at every price point. This shift results in a movement down along the demand curve to a new equilibrium. Contrary to decreasing or eliminating consumer surplus, an increase in supply actually increases consumer surplus. 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.
As prices fall due to the increased supply, consumers are able to purchase the good for less than they were willing to pay, which increases their surplus. Therefore, both b) decrease consumer surplus and d) eliminate consumer surplus are incorrect responses to the effects of an increase in supply on consumer surplus.