1.2.8 consumer and producer surplus

Question 1

what is consumer surplus?

Answer 1

its the difference consumers are willing and able to pay for a good/service and the price they actually pay.

Question 2

where is consumer surplus located in a diagram?

what is the triangle shape?

Answer 2

consumer surplus is below the demand curve and above the price line (market price)

its a right angle triangle

Question 3

what is producer surplus?

Answer 3

its the difference between the price producers are willing and able to supply goods/services for and the price they actually receive (in market).

Question 4

where is producer surplus located in a diagram?

what is the triangle shape?

Answer 4

it’s above the supply curve and below the price line (market price)

it’s a right-angle triangle upside down

Question 5

what is society surplus?

Answer 5

consumer surplus plus producer surplus

triangle shape combined is a arrow