5.12 Consumer and producer surplus Flashcards
1
Q
why is welfare/surplus analysis important
A
to understand if resources are being allocated efficiently or not
2
Q
what is consumer surplus?
A
The difference between the price consumers are wiling and able to pay for a good or service compared to the price the good or service actually is
3
Q
what is producer surplus?
A
the difference between the price a firm succeeds in charging and the minimum price it would be prepared to accept
