Question

Given below are two statements:
Statement (I): The sum of consumer surplus and producer surplus is known as total economic surplus.
Statement (II): Any shift of the supply curve to the left reduces the consumer surplus.
In light of the above statements, choose the most appropriate answer from the options given below.

• A. Both Statement (I) and Statement (II) are correct.
• B. Both Statement (I) and Statement (II) are incorrect.
• C. Statement (I) is correct but Statement (II) is incorrect.
• D. Statement (I) is incorrect but Statement (II) is correct.

Hint:

A leftward shift of the supply curve increases market prices, which always hurts consumers by reducing consumer surplus.

Answer 1

The Correct Option is A