Consumer Surplus
- This is the difference between the price a consumer is willing to pay and the price he actually pays.
- For example if you were willing to buy a computer game for £50, but can buy it for £15 in the sales your consumer surplus is £35
Diagram Consumer and Producer Surplus
- Consumer Surplus is therefore the difference between the Demand curve and the market price
Producer Surplus
- This is the difference between the price a firm receives and the price it would be willing to sell it at.
- Therefore it is the difference between the Supply curve and the market price
Essays and Revision Notes on Supply and Demand
Elasticity
