Unit 1: Consumer and Producer Surplus

• What is Consumer Surplus?

  The difference between the price consumers are willing to pay and the price they actually pay
• Where is consumer surplus located on a graph?

  Below the demand curve, above the price line; in the shape of a triangle
• When is consumer and producer surplus maximized

  When the market is in equilibrium
• What causes a shift in consumer or producer surplus?

  Changes to the conditions of demand and supply; example, increased S/D increased CS
• What is producer surplus?

  Difference between the amount the producer is willing to sell for, and they amount they receive
• Where is producer surplus located on a graph?

  Above the supply curve and below the price line
• What is social surplus?

  The sum of consumer and producer surplus; total benefits gained by sellers and buyers in a market
• What is the expression of Producer Surplus?

  ABPe
• What is the expression of Consumer surplus?

  CBPe