1.2|5 Consumer & Producer Surplus

Question 1

What is Consumer Surplus ?

Answer 1

Difference between what consumers are willing to pay for a good and what they actually pay.

Question 2

What is Producer Surplus ?

Answer 2

Difference between the market price which firms receive and the price at which they are willing and able to supply.

Question 3

How is consumer surplus shown on the graph ?

Answer 3

Area between price , supply line and where demand meets the y-axis .

Question 4

How is producer surplus shown on the graph ?

Answer 4

Area between price , supply line and where supply meets the y-axis .