Micro 7 - Consumer surplus Flashcards
1
Q
Consumer surplus definition
A
The difference between what consumers are willing to pay and what they actually pay
2
Q
What is consumer surplus a measure of?
A
It’s a measure of the additional benefit that consumers receive because they’re paying less for something than what they were willing to pay.
3
Q
Where is consumer surplus illustrated?
A
Below the demand curve, above the market price
4
Q
What is the effect of an increase in price on consumer surplus?
A
contraction in consumer surplus
5
Q
What is the impact of a decrease in price on consumer surplus?
A
Expansion in consumer surplus
6
Q
How do you label consumer surplus?
A
e.g - P1, B, C
