1.2.8

Question 1

Consumer surplus

Answer 1

The difference between the price the consumer is willing and able to pay and the price they actually pay
Based on what the consumer perceived as their private benefit from consuming the good
It’s always the area above market price and below the demand curve

Question 2

Increasing consumer surplus

Answer 2

Shift the demand curve out

Question 3

Decreasing consumer surplus

Answer 3

Shifting the supply curve in

Question 4

Producer surplus

Answer 4

The difference between the price the producer is willing and able to charge and the price they actually charge
Private benefit gained by the producer that covers their costs and measured by profit

Question 5

Increasing producer surplus

Answer 5

Shift the supply curve out
Could also be to an increase in demand

Question 6

Economic welfare

Answer 6

The total benefit society receives from an economic transaction
Area of prodcucer surplus+ consumer surplus