Consumer And Producer Surplus Flashcards
1
Q
What is consumer surplus
A
Consumer surplus is the difference between the price consumers are willing and able to pay for a good/service and the price they actually pay
2
Q
Where is the consumer surplus found on a diagram
A
Below the demand curve and above the price line
3
Q
What is producer surplus
A
Producer surplus is the difference between the price producers are willing and able to supply a good/ service for and the price they actually recieve
4
Q
Where is producer surplus found
A
Above the supply curve and below the price line
5
Q
What’s society surplus
A
consumer surplus + producer surplus
6
Q
What happens when the supply curve shifts to the left/right
A
A shift to the left in the supply curve decreases producer surplus
A shift to the right increases
