Consumer and producer surplus Flashcards
1
Q
What is consumer surplus? (RSP)
A
A measure of the welfare that people gain from consuming goods and services It’s the difference between the total amount that consumers are willing and able to pay for a good or service and the market price. Under the demand curve and above market price.
2
Q
What is producer surplus? (QRS)
A
The difference between two price levels. The difference between the price producers are willing and able to supply a good or service for and the price they actually receive. Area above the supply curve and below the market price.
