2.5 Consumer and producer surplus

Question 1

Define the term “Consumer Surplus”

Answer 1

The difference between the price a consumer is willing to pay for a product and it’s market price.

Question 2

Define the term “Producer Surplus”

Answer 2

The difference between the price a producer is willing to accept and what is actually paid.

Question 3

Define the term “Society Surplus”

Answer 3

The sum of consumer surplus and producer surplus.