Question

When technology improves in the ice cream industry, consumer surplus will:

a) increase
b) decrease
c) remain the same
d) disappear

Answer 1

When technology improves in the ice cream industry, consumer surplus will increase.

Step-by-step explanation:

When technology improves in the ice cream industry, consumer surplus will increase. With a technological improvement that brings about a reduction in costs of production, there will be an increase in supply curves by individual firms and at the market level. This will lead to higher profits for existing firms and attract new firms into the market, which will ultimately increase the supply of ice cream and benefit consumers by reducing prices and increasing consumer surplus.