What happens to consumer surplus when there is a decrease in product prices?

When there is a decrease in product prices, consumer surplus generally increases. Consumer surplus is defined as the difference between what consumers are willing to pay for a good or service and what they actually pay. When prices drop, consumers pay less for the same product, which means they are able to gain more benefit or surplus from their purchases.

As the market price falls, the area representing consumer surplus on a supply and demand graph expands because more consumers are able to buy the product at lower prices. Additionally, those already willing to purchase the product at higher prices enjoy a greater surplus as well because they are now paying less than what they were previously willing to pay. Therefore, a price decrease typically leads to a significant increase in consumer surplus.

In contrast, other options imply stability or a decrease in consumer surplus, which does not align with the principles of how consumer behavior reacts to price changes.