Question

In which of the following situations can you say, without further information, that consumer surplus decreases relative to the market equilibrium level?

a. Your state passes a law that pushes the interest rate (i.e., the price) for payday loans below the equilibrium rate.
b. The federal government enforces a law that raises the price of dairy goods above the equilibrium.
c. Your city passes a local property tax, under which buyers of new houses have to pay an additional 5 percent on top of the purchase price.
d.The government lowers the effective price of food purchases through a food-stamp program.

Answer 1

The correct option is b. Consumer surplus decreases when the federal government enforces a law that raises the price of dairy goods above the equilibrium.

Consumer advantages from market competition are measured economically as consumer surplus. When customers pay less for a good or service than they are willing to, this is known as a consumer surplus. It measures the extra benefit that consumers get from pay less for something than they would have been prepared to. One can contrast consumer surplus with producer surplus.

Learn more about Consumer surplus here:

https://brainly.com/question/15416023

#SPJ4