Consumer and producer surplus

Question 1

Consumer surplus:

Answer 1

Economic term used to describe the difference between how much total utility or value you place on getting a good or service versus the price you actually paid for it.

Question 2

Total consumer surplus:

Answer 2

Adding up all the consumer surpluses.

Question 3

A change in price and consumer surplus:

Answer 3

Consumer surplus increases because there are new buyers and existing buyers are paying a lower price. Causing an increase in the total consumer surplus.

Question 4

Producer surplus:

Answer 4

Difference between the amount the producer receives and the minimum amount the producer is willing to accept.

Question 5

Total producer surplus:

Answer 5

Indicates the minimum prices suppliers are prepared to accept.

Question 6

Market equilibrium and concumer and producer surplus:

Answer 6

Important point to note about the consumer and producer surpluses at equilibrium is that it is the point where the total surplus (consumer surplus and producer surplus) is maximised.