Questions: All else equal, what happens to consumer surplus if the price of a good increases? a. Consumer surplus is unchanged b. Consumer surplus increases c. Consumer surplus decreases d. Consumer surplus may increase, decrease, or remain unchanged.

The answer is C: Consumer surplus decreases.

Explanation for each option:

a. Consumer surplus is unchanged: This option is incorrect. Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. If the price of a good increases, the amount consumers are willing to pay above the new price decreases, thus reducing consumer surplus.

b. Consumer surplus increases: This option is incorrect. An increase in the price of a good means that consumers are paying more for the same good, which reduces the difference between their willingness to pay and the actual price, thereby decreasing consumer surplus.

c. Consumer surplus decreases: This option is correct. When the price of a good increases, the area representing consumer surplus on a demand curve (the area between the demand curve and the price level) becomes smaller, indicating a decrease in consumer surplus.

d. Consumer surplus may increase, decrease, or remain unchanged: This option is incorrect. All else being equal, an increase in the price of a good will lead to a decrease in consumer surplus, as explained above.