Consumer & Producer Surplus

Question 1

Consumer Surplus

Answer 1

Difference between what the consumer spends and what they would have been prepared to spend

Question 2

Consumer Surplus Diagram (u)

Answer 2

Question 3

Consumer surplus vs Producer surplus Diagram (u)

Answer 3

If demand is inelastic compared to supply, there is greater consumer surplus than producer surplus & vice versa See Diagram

Question 4

Producer Surplus

Answer 4

Difference between producer revenue and the revenue they would have been prepared to accept

Question 5

Producer Surplus Diagram (u)

Answer 5

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Question 6

Changes in Producer & Consumer Surplus Diagram

Answer 6