5.11 Consumer and Producer Surplus

How are consumer and producer surplus represented graphically

Consumer surplus lies below the demand curve and above the price level

Producer surplus lies above the supply curve and below the price level

What is this significance of total surplus 

Total surplus (consumer + producer surplus) measures the overall welfare or efficiency in a market

What is producer surplus

The difference between the market price and the minimum price producers are willing to accept

What is consumer surplus

The difference between what consumers are willing to pay for a good and the market price they actually pay.

How does monopoly affect consumer and producer surplus

Monopolies can reduce consumer surplus through higher prices and may increase producer surplus, potentially leading to deadweight loss