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What is consumer surplus
The difference between the price that the consumer is willing and able to pay and what they actually pay
How does the law of diminishing returns affect consumer surplus
Each extra unit generates less utility than the one already consumed = consumers are willing to pay less for the extra units
Inelastic demand curves give a larger or smaller consumer surplus?
Larger - as they are willing to pay a higher price to consume the good
What is the producer surplus
The difference between the price the producer is willing to charge and the price they actually charge
