Consumer and Producer Surpluses Flashcards
1
Q
What is a surplus?
A
The benefits/welfare/utility that either a consumer or producer receives from purchasing or selling goods and services.
2
Q
What is a consumer surplus?
A
The difference between the total amount that consumers are willing to pay for a good/service and the total amount they actually pay.
3
Q
Where is the consumer surplus on a supply and demand diagram?
A
The triangle under the demand curve and above the equilibrium price.
4
Q
What is a producer surplus?
A
The difference between the price a producer receives for a good/service and the minimum amount the producer is willing to accept for that good/service.
5
Q
Where is the producer surplus on a supply and demand diagram?
A
The triangle above the supply curve and below the equilibrium price.
