Consumer + Producer Surplus Flashcards
1
Q
Consumer surplus
A
Is the difference between the price consumers are willing to pay for a good or service and the market price
2
Q
Consumer surplus diagram
A
3
Q
Changes in market price - consumer surplus
A
4
Q
Consumer surplus + price elasticity of demand
A
When demand is inelastic, there is a greater consumer surplus surplus because there are some buyers wiling to pay a very high price to continue consuming the product.
5
Q
Consumer surplus - inelastic
A
6
Q
Producer surplus
A
Is the difference between the price that producers are willing to sell for and the market price
7
Q
Consumer and producer surplus
A
Consumer surplus - is the are above the equilibrium price but below the demand curve
Producer surplus - is the area below the equilibrium price but above the supply curve
