Consumer And Producer Surplus Flashcards
Demand curve = What other curve
Demand curve = Marginal benefit curve
What is marginal benefit
The most consumers are willing to pay
What is marginal utility
The additional benefit from consuming an extra unit
What is diminishing marginal utility
The more a good is consumed, the marginal utility derived from each extra unit decreases
Total utility = Total benefit
Total utility = Total benefit (Marginal utility added up)
Define: Consumer surplus
The difference between what consumers are willing to pay and what they actually pay
Define: Producer surplus
The difference between what producers are willing to sell for and what they actually sell for
Consumer surplus region
The higher triangle - Touching demand curve
Supply curve = What other curve
Supply curve = Marginal cost curve
Producer surplus region
The lower triangle - Touching supply curve
