Higher prices for sports jerseys can result in which of the following effects on consumer surplus?

• A. No change in consumer surplus since willingness to pay remains constant
• B. An increase in consumer surplus because consumers value jerseys more
• C. Consumer surplus becomes negative as all consumers stop buying jerseys
• D. A decrease in consumer surplus as fewer consumers are willing to buy at the higher price

Answer: (D)

Verified step by step guidance

1. Recall the definition of consumer surplus: it is the difference between what consumers are willing to pay for a good and what they actually pay.
2. Understand that when the price of sports jerseys increases, the amount consumers pay rises, reducing the difference between willingness to pay and actual price.
3. Recognize that a higher price typically causes some consumers to stop buying the jerseys because the price exceeds their willingness to pay, reducing the total quantity demanded.
4. Conclude that with fewer consumers purchasing and a higher price paid by those who do buy, the overall consumer surplus decreases.
5. Therefore, the effect of higher prices on consumer surplus is a decrease, as fewer consumers benefit from the purchase and those who do pay more.