2.8 Consumer & Producer Surplus Flashcards
1
Q
What is consumer surplus?
A
Difference between the price consumers are willing and able to demand at and the price they receive
2
Q
What is producer surplus?
A
Difference between the price producers are willing and able to supply at and the price they receive
3
Q
Where is consumer surplus on a subsidy diagram?
A
Below market price line
4
Q
Where is producer surplus on a subsidy diagram?
A
Above market price line
5
Q
Where is consumer surplus on an indirect tax diagram?
A
Above market price line
6
Q
Where is producer surplus on an indirect tax diagram?
A
Below market price line
7
Q
What is community surplus?
A
Sum of consumer and producer surplus
8
Q
What is community surplus on a diagram?
A
New consumer surplus, lost consumer surplus, lost producer surplus, new producer surplus
