Economics Welfare Economics Questions
Consumer surplus is a measure of the economic benefit that consumers receive when they are able to purchase a good or service at a price lower than the maximum price they are willing to pay. It represents the difference between the price consumers are willing to pay and the actual price they pay in the market. Consumer surplus is derived from the concept of the demand curve, which shows the quantity of a good or service that consumers are willing and able to purchase at different prices. The area below the demand curve and above the market price represents the consumer surplus. It reflects the additional satisfaction or utility that consumers gain from paying less for a good or service than they were willing to pay. Consumer surplus is an important concept in welfare economics as it measures the overall welfare or well-being of consumers in a market.