10) Economic Welfare: Consumer And Producer Surplus

Question 0

Where is the consumer surplus on the graph

Answer 0

⚫️Area of the triangle
➡️above the market price
➡️below the demand curve

Question 1

What does consumer surplus mean

Answer 1

⚫️Difference between
➡️price a consumer would be willing to pay
➡️actual market price they had to pay
➡️measure of consumer welfare

Question 2

What does producer surplus mean

Answer 2

⚫️difference between
➡️price the supplier willing to accept
➡️market price they actually receive
➡️measures the producer welfare

Question 3

Where is the producer surplus in the graph

Answer 3

⚫️triangle below the market price

➡️but above supply curve