In a competitive market, the price and quantity of a product are determined by the forces of demand and supply. At the market equilibrium, consumers benefit from paying less than their maximum willingness to pay. Producers benefit by selling at a price higher than their marginal cost, which is the lowest price they are willing to accept. These benefits are represented as consumer surplus and producer surplus.

When demand decreases, the demand curve shifts to the left, leading to a lower equilibrium price and quantity. Producers sell fewer goods at a lower price. As a result, producer surplus decreases. Consumer surplus is affected in two ways. A part of the initial consumer surplus disappears due to the lower quantity sold, but the price reduction also increases consumer surplus by transferring some surplus to the producers.

If demand increases, the demand curve shifts to the right, resulting in a higher price and greater quantity sold. This benefits producers, as their surplus expands with the higher price and increased sales. However, consumer surplus experiences mixed effects. While some of the initial consumer surplus is lost, an additional area is included in the new consumer surplus. This happens because the price increase reduces the consumer surplus, but the higher quantity sold expands it. 

Changes in demand affect market equilibrium. They change the price and quantity of goods sold. As a result, both consumer and producer surplus change. The surplus is redistributed based on how price and quantity are adjusted.