Consumer and Producer Surplus Flashcards
1
Q
What is Producer Surplus?
A
Producer Surplus is the difference between what a producer is willing to supply for and the price that they do supply for. This is represented on a diagram as the area above the supply curve and below the equilibrium line.
2
Q
What is Consumer Surplus?
A
Consumer Surplus is the difference between the price that a consumer is willing to pay for a good, and the price they pay. This is represented on a diagram as the area below the demand line and above the equilibrium line.
