consumer and producer surplus Flashcards
1
Q
what is consumer surplus
A
the difference between the price that consumer is willing and able to pay for a good or service and the price they actually pay for the good or service
2
Q
what is producer surplus
A
the difference between the price that a producer is willing and able to supply for a good or service and the price that they actually receive
3
Q
how to find a consumer surplus on a graph and how this changes
A
-the area below the demand curve and above the price line
-as the price falls, the consumer surplus increases
4
Q
how to find a producer surplus and how this changes
A
-the area above the supply curve and below the price line
-as the price falls, the producer surplus decreases
5
Q
society surplus
A
consumer surplus + producer surplus
