Consumer Surplus Rises from Favorable Market Shifts

Steps:

• Define consumer surplus as the area below the demand curve and above the market price, representing net benefit to buyers.
• Analyze demand increase: shifts curve right, raising price and quantity, but higher price reduces surplus per unit.
• Analyze supply increase: shifts curve right, lowering price and raising quantity, expanding surplus area.
• Combine effects: simultaneous increases in demand and supply boost quantity significantly, often netting higher surplus despite mixed price impact.

Why D is correct:

• Both shifts expand market quantity, increasing total consumer surplus per the surplus formula (integral of demand above price), as supply gain outweighs demand's price rise in typical scenarios.

Why the others are wrong:

• A: Supply increase alone raises surplus, but ignores demand's potential role.
• B: No shifts mean unchanged surplus.
• C: Demand increase alone raises price, shrinking surplus area.

Final answer: D