If buyer demand for private-label athletic footwear is projected to grow, what is the most likely effect on consumer surplus in the market, assuming supply remains unchanged?

• A. Consumer surplus will remain unchanged because supply is constant.
• B. Consumer surplus will decrease because higher demand leads to higher prices for all buyers.
• C. Consumer surplus will disappear because the market cannot meet the increased demand.
• D. Consumer surplus will increase because more buyers are willing to pay at or above the market price.

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of consumer surplus. Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. It represents the net benefit to consumers in the market.
2. Step 2: Analyze the effect of an increase in demand while supply remains unchanged. When demand increases, the demand curve shifts to the right, indicating that more buyers are willing to purchase the product at each price level.
3. Step 3: Consider the impact on market price and quantity. With supply fixed, the increased demand typically leads to a higher equilibrium price and a higher equilibrium quantity sold.
4. Step 4: Evaluate how consumer surplus changes. Although the price rises, the increase in quantity and the willingness of more consumers to pay at or above the new price generally leads to an increase in total consumer surplus.
5. Step 5: Conclude that consumer surplus increases because the area under the demand curve and above the price line expands due to more buyers entering the market and being willing to pay the market price.