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Understanding Consumer Surplus Explained

Consumer surplus is the economic measurement of the benefits consumers receive when they pay less for a product than what they are willing to pay. It is influenced by the theory of marginal utility and is represented visually as the area under the demand curve. The total economic surplus is the sum of consumer surplus and producer surplus.

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3 views1 page

Understanding Consumer Surplus Explained

Consumer surplus is the economic measurement of the benefits consumers receive when they pay less for a product than what they are willing to pay. It is influenced by the theory of marginal utility and is represented visually as the area under the demand curve. The total economic surplus is the sum of consumer surplus and producer surplus.

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yugprintopacks
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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What Is Consumer Surplus?

Consumer surplus is an economic measurement of consumer benefits resulting from market


competition. A consumer surplus happens when the price that consumers pay for a product or
service is less than the price they're willing to pay. 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.

Consumer surplus may be compared with producer surplus.

KEY TAKEAWAYS
A consumer surplus happens when the price consumers pay for a product or service is less
than the price they're willing to pay.
Consumer surplus is based on the economic theory of marginal utility, which is the additional
satisfaction a consumer gains from one more unit of a good or service.
Consumer surplus always increases as the price of a good falls and decreases as the price of a
good rises.
It is depicted visually by economists as the triangular area under the demand curve between the
market price and what consumers would be willing to pay.
Consumer surplus plus producer surplus equals the total economic surplus.

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