1.2.8 Consumer and producer surplus

Question 1

Community surplus

Answer 1

The sum of consumer and producer surplus at a given market price and output

Question 2

Consumer surplus

Answer 2

A measure of the welfare that people gain from consuming goods and services or a measure of the benefits they derive from the exchange goods.

It’s the difference between the total amount that consumers are willing and able to pay for a good and the total they pay

Question 3

Producer surplus

Answer 3

The difference between what producers are willing and able to supply for a good and the price they actually receive