Venezuelans started buying items immediately because of their fear of which economic phenomenon affecting consumer surplus and willingness to pay?

• A. Decreasing population leading to lower demand
• B. Rising inflation reducing the purchasing power of money
• C. Technological advancements lowering production costs
• D. Government subsidies increasing supply

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the economic phenomenon described. Rising inflation means that prices of goods and services increase over time, which reduces the purchasing power of money.
2. Step 2: Recognize how rising inflation affects consumer behavior. When consumers expect prices to rise, they tend to buy items immediately to avoid paying higher prices later.
3. Step 3: Connect this behavior to consumer surplus. Consumer surplus is the difference between what consumers are willing to pay and what they actually pay. Rising inflation reduces consumer surplus because the real value of money decreases.
4. Step 4: Analyze the impact on willingness to pay. As inflation rises, consumers' willingness to pay may increase in the short term to secure goods before prices go up, but their overall purchasing power declines.
5. Step 5: Conclude that the fear of rising inflation leads to immediate buying, which is the correct explanation for the behavior described in the problem.