Income Effect on Normal Goods Boosts Consumer Surplus

Steps:

• Identify consumer surplus as the area between the demand curve and market price up to quantity sold.
• For a normal good, higher income shifts demand curve rightward, increasing quantity demanded at each price.
• This rightward shift raises equilibrium quantity and price, but expands total surplus area due to more consumers gaining value.
• Compare effects of each option on demand and surplus.

Why A is correct:

• For normal goods, income rise shifts demand right per the income effect in demand theory, increasing consumer surplus by enlarging the value-price gap over more units.

Why the others are wrong:

• B: More substitutes shifts demand left, reducing quantity and surplus.
• C: Higher complement price shifts demand left, lowering quantity and surplus.
• D: Higher good price shrinks surplus area directly by raising the price line.

Final answer: A