a) Consumer and producer surplus

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6 Terms

1
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  • define social surplus

  • the total monetary benefit gained by consumers and producers from market prices

2
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  • state the formula for social surplus

  • social surplus = consumer surplus + producer surplus

3
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  • define consumer surplus

  • the difference in the value of the amount of money a consumer is willing to spend to purchase a good or service and how much they actually spend

4
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  • define producer surplus

  • the difference in the value of the amount of money a producer is willing to spend to supply a good or service and how much they actually spend

5
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  • state when consumer and producer surplus are maximised

  • at market equilibrium

6
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  • show how to represent consumer and producer surplus on a graph

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