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Chapter 3: Q.31 (page 78)

What is consumer surplus? How is it illustrated on

a demand and supply diagram?

Short Answer

Expert verified

Consumer surplus-it's a difference between the amount a consumer willing to pay and the amount actually paying for particular good or service.

Step by step solution

01

Step 1. Concept

Surplus refers to more of a something than you actually need. Though, in economic sense surplus can have different meanings, a surplus in market is different from a budget surplus and economic surplus.

02

Step 2. Explanation


Consumer surplus refers to the difference between the price a consumer is willing to pay and the price they must pay. It is shown by the area between the demand curve and the equilibrium price.

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Most popular questions from this chapter

What causes a movement along the demand curve?

What causes a movement along the supply curve?

Use the four-step process to analyze the impact

of a reduction in tariffs on imports of iPods on the

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Does a price ceiling change the equilibrium price?

The computer market in recent years has seen many more computers sell at much lower prices. What shift in demand or supply is most likely to explain this outcome? Sketch a demand and supply diagram and explain your reasoning for each.

(a) A rise in demand

(b) A fall in demand

(c) A rise in supply

(d) A fall in supply

What is the relationship between quantity

demanded and quantity supplied at equilibrium? What is

the relationship when there is a shortage? What is the

relationship when there is a surplus?
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