If the supply of a good increases, what happens to consumer surplus?

• A. Consumer surplus decreases
• B. Consumer surplus increases
• C. Consumer surplus stays the same
• D. Consumer surplus becomes negative

Answer: (C)

When supply increases, the market price falls and more of the good is bought and sold. Consumer surplus is the extra benefit buyers get when what they actually pay is less than what they would be willing to pay, measured as the area under the demand curve and above the price up to the quantity purchased. With a lower price, that area expands for both existing buyers and new buyers entering the market, so the total consumer surplus rises. It wouldn’t stay the same because the price drop and higher quantity add more value to consumers, and it wouldn’t become negative because buyers end up paying less than their willingness to pay.