1.2.8 Consumer and producer surplus

Question 1

Consumer surplus:

Answer 1

Consumer surplus is the difference between the price the consumer is willing to pay and the price they actually pay

Question 2

Producer surplus

Answer 2

Producer surplus is the difference between the price the supplier is willing to produce their product at and the price they actually produce at

Question 3

Where is the consumer surplus?

Answer 3

Above market price and below the demand curve

Question 4

Where is the producer surplus?

Answer 4

Area below the market price and above the supply curve