How can information provided by the government influence consumer surplus in a market?

• A. By forcing consumers to buy only government-approved products
• B. By eliminating the concept of willingness to pay
• C. By always reducing consumer surplus through higher prices
• D. By helping consumers make more informed choices, potentially increasing their consumer surplus

Answer: (D)

Verified step by step guidance

1. Understand the concept of consumer surplus: it is the difference between what consumers are willing to pay for a good or service and what they actually pay.
2. Recognize that government-provided information can reduce uncertainty and help consumers better evaluate the quality and value of products.
3. Analyze how improved information allows consumers to make choices that better match their preferences and willingness to pay, potentially increasing their consumer surplus.
4. Note that government information does not force purchases or eliminate willingness to pay; instead, it enhances decision-making.
5. Conclude that by helping consumers make more informed choices, government information can increase consumer surplus rather than always reducing it.