consumer surplus

• What is the maximum price the consumer is willing to pay for the umbrella?

  15 pounds
• What is the equilibrium price of the umbrella in the market?

  5 pounds
• How much more is the consumer willing to pay compared to the equilibrium price?

  10 pounds
• What is consumer surplus defined as?

  The difference between maximum and minimum price
• How is consumer surplus represented in a market?

  By adding individual consumer surpluses
• What does the area under the demand curve represent?

  The utility gained by a consumer
• What does the net gain for consumers represent?

  The difference between total utility and cost
• What shape represents consumer surplus in the market?

  A triangle
• How is the area of the consumer surplus triangle calculated?

  Using half times base times height
• If the quantity purchased is 50, what is the formula for calculating consumer surplus?

  $\frac{1}{2} \times 50 \times 10$
• What does the consumer surplus represent for the consumer?

  Additional utility gained from the purchase
• What is the process to find market consumer surplus?

  • Identify maximum price consumers are willing to pay
  • Determine equilibrium price in the market
  • Calculate individual consumer surplus
  • Sum individual surpluses for total market surplus