1.13 Consumer And Producer Surplus

Question 1

What is consumer surplus?

Answer 1

• The extra amount of money consumers are prepared to pay for a good or service
• It is the utility or satisfaction gained from a good or service in excess of the amount paid for it

Question 2

What does consumer surplus show?

Answer 2

It shows the welfare gained by consumers for buying the good

Question 3

Diagram for consumer surplus?

Answer 3

Difference between the demand curve and the price level shows the consumer surplus.
Look at notion

Question 4

What is producer surplus?

Answer 4

• • The extra amount of money paid to producers above what they are willing to accept
  • It is the extra earning obtained by a producer above the minimum required for them to supply the good or service.

Question 5

What does producer surplus show?

Answer 5

Shows the economic gain for producers by selling the good

Question 6

Diagram for producer surplus

Answer 6

Difference between the supply curve and the price level shows the consumer surplus
Check notion

Question 7

What does more inelastic demand lead to?

Answer 7

The higher the consumer surplus is likely to be

Question 8

What does more inelastic supply lead to?

Answer 8

The higher the producer surplus is likely to be

Question 9

Diagram for a decrease in demand

Answer 9

See notion

Question 10

How would this affect surplus?

Answer 10

Lead to a fall in consumer and producer surplus, as both price and output decreases

Question 11

What would happen if there was an increase in demand?

Answer 11

Both consumer and producer surplus will increase

Question 12

Diagram for a decrease in supply

Answer 12

Check notion

Question 13

How would this affect surplus?

Answer 13

It would lead to a fall in consumer and producer surplus

Question 14

What would happen if there was an increase in supply?

Answer 14

An increase in supply would lead to an increase in consumer and producer surplus

Question 15

Check notion for the rest of notes