Consumer Surplus 

 

Definition of Consumer Surplus

This is the difference between what the consumer pays and what he would have been willing to pay.

For example: If you would be willing to pay £50 for a ticket to see F. A. Cup final, but you can buy ticket for £40; in this case your consumer surplus is £10.

Diagram of Consumer Surplus

consumer surplus

The demand curve shows the maximum price that a consumer would have paid. Consumer surplus is the area between the demand curve and the market price.

If the demand curve is inelastic, consumer surplus is likely to be greater

 

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