Consumer surplus is the difference between what consumers are willing to pay for a good and the actual market price, measuring consumer welfare. Producer surplus is the difference between the price producers receive and their cost of production, measuring producer welfare. Total economic welfare is calculated as the sum of consumer surplus and producer surplus.
Consumer surplus is the difference between what consumers are willing to pay for a good and the actual market price, measuring consumer welfare. Producer surplus is the difference between the price producers receive and their cost of production, measuring producer welfare. Total economic welfare is calculated as the sum of consumer surplus and producer surplus.
Consumer surplus is the difference between what consumers are willing to pay for a good and the actual market price, measuring consumer welfare. Producer surplus is the difference between the price producers receive and their cost of production, measuring producer welfare. Total economic welfare is calculated as the sum of consumer surplus and producer surplus.
between the price consumers are willing and able to pay for a good (based on their expected satisfaction) and what they actually pay (i.e. the price in the market). The concept of consumer surplus can be explained with help of a numerical example and diagram as below: The concept of consumer surplus can be explained with help of a numerical example and diagram as below: Change in consumer surplus If there is a shift in the demand curve or supply curve leading to a change in the equilibrium market price and quantity, then the level of consumer surplus will also change. Producer surplus
Producer surplus is a measure of producer
welfare.
It is measured as the difference between
the price at which producers are willing and able to supply a good and the price they actually receive. The concept of producer surplus can be explained with help of a numerical example and diagram as below: The concept of producer surplus can be explained with help of a numerical example and diagram as below: Change in Producer surplus
If there is a shift in the demand curve or
Supply curve leading to a change in the equilibrium market price and quantity, then the level of producer surplus will also change. Total economic welfare = consumer surplus + producer surplus Total community welfare = Consumer surplus + Producer surplus