2.4 Consumer and Producer Surplus Flashcards
1
Q
What is consumer surplus?
A
It is the difference between the price that consumers pay and the price that they are willing to pay. It is the area above the price line but below the demand curve on a supply and demand curve graph.
2
Q
What is producer surplus?
A
It is the difference between the price the producer is willing to charge and the price they actually charge. It is the private benefit gained by the producer that covers their costs, and is measured by profit.
3
Q
What is the total surplus?
A
It is the producer surplus plus the consumer surplus. It is the total benefit to society of economic agents buying and selling a particular good or service.
