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3d. Consumer and producer surplus

Consumer surplus is the difference between what a consumers would have paid for a good and what they had to pay.

The price is set at the market equilibrium, however some consumers would have paid more and therefore benefit

Shifts in the demand and supply curves change the level of consumer and producer surplus.

The most clear and obvious changes to the consumer surplus is after there has been a change in supply.

In the first diagram, as supply shifts outwards the price falls from P1 to P2. This means that consumer surplus increases from P1AB to P2AC

This would mean that there is an overall benefit to consumers.

The most clear and obvious changes to the producer surplus is after there has been a change in demand.

In this diagram, as demand shifts outwards the price increases from P1 to P2. This means that producer surplus increases from P1AE to P2AF.

This would mean that there is an overall benefit to producers.

3d. Consumer and producer surplus

Consumer surplus is the difference between what a consumers would have paid for a good and what they had to pay.

The price is set at the market equilibrium, however some consumers would have paid more and therefore benefit

Shifts in the demand and supply curves change the level of consumer and producer surplus.

The most clear and obvious changes to the consumer surplus is after there has been a change in supply.

In the first diagram, as supply shifts outwards the price falls from P1 to P2. This means that consumer surplus increases from P1AB to P2AC

This would mean that there is an overall benefit to consumers.

The most clear and obvious changes to the producer surplus is after there has been a change in demand.

In this diagram, as demand shifts outwards the price increases from P1 to P2. This means that producer surplus increases from P1AE to P2AF.

This would mean that there is an overall benefit to producers.

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