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Theme 1: Introduction to markets and market failure
1.2 How markets work
1.2.8 Consumer and producer surplus
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Created by
Keane
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Cards (4)
What is
consumer surplu
s?
Difference between the
price
the consumer is willing to pay and the price they actually pay
Where is consumer surplus on a supply and demand diagram?
Area below the demand curve and above the equilibrium line (to triangle)
What is
producer surplus
?
The difference between the
price
that the producer is wiling to supply a good at and the price that they actually
receive
for it
Where is
producer surplus
?
The area above the
supply curve
and below the
equilibrium line
(bottom triangle)