consumer and producer surplus

• Consumer surplus is the difference between the price consumers are willing and able to pay and the price they actually pay
• Consumer surplus is always a triangle in shape on a diagram.

  False
• Consumer surplus is found below the demand
• At price p1 and quantity q1, what area represents consumer surplus in the diagram?

  ABP1
• If the price increases from p1 to p2, consumer surplus decreases.
• Producer surplus is found above the supply
• When the price drops to p3, consumer surplus increases to the area ADP3
• If the price rises to p2, producer surplus increases to the area p2AC
• At price p1 and quantity q1, what area represents producer surplus in the diagram?

  p1AB
• When the price drops to p3, producer surplus decreases to the area p3AD.
• In an economic market where demand equals supply, what area represents consumer surplus?

  Beneath demand, above price
• Producer surplus in a market is found above the supply curve and beneath the price
• What is society's surplus in economics?

  Consumer surplus + producer surplus
• Steps to analyze consumer surplus after a supply shift to the left

  1️⃣ Initial equilibrium at p1 and q1

  2️⃣ New equilibrium at p2 and lower quantity

  3️⃣ Consumer surplus 1: area ABP1

  4️⃣ Consumer surplus 2: area ACP2
• After a supply shift to the left, consumer surplus increases.

  False
• After a demand shift to the right, producer surplus increases to the area p2CA
• Producer surplus is always a triangle in shape on a diagram.

  False
• Match the concept with its description:

  Consumer surplus ↔️ Willingness to pay minus actual price

  Producer surplus ↔️ Price received minus willingness to supply

  Society's surplus ↔️ Sum of consumer and producer surplus
• Consumer and producer surplus can only be calculated using triangles on a diagram.

  False