a) Consumer and producer surplus

a) the distinction between consumer and producer surplus

b) the use of supply and demand diagrams to illustrate consumer and producer surplus

c) how changes in supply and demand might affect consumer and producer surplus

social surplus = the total monetary benefit gained by consumers and producers from market prices

• social surplus = consumer surplus + producer surplus

consumer surplus = the difference in the amount of money a consumer is willing to pay to purchase a good or service and how much they actually pay

producer surplus = the difference in the amount of money a producer is willing to pay to supply a good or service and how much they actually pay

at market equilibrium → consumer and producer surplus are maximised