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Refer to Figure 9.1.1 above. If the market is in equilibrium, total consumer and producer surplus is;
A) $0.
B) $100.
C) $800.
D) $1200.
E) $2000.
Consumer Surplus
The difference between the total amount that consumers are willing and able to pay for a good or service and the actual amount they do pay.
Producer Surplus
The difference between the amount producers are willing to sell a good for and the actual amount they receive by selling it at the market price.
Market Equilibrium
The point at which the quantity demanded and the quantity supplied of a product are equal, leading to a stable market price.
- Assess the influence of market equilibrium on the excess benefits received by consumers and producers.
- Gain an understanding of what constitutes consumer surplus and the technique used for its calculation.
- Familiarize oneself with the concept of producer surplus and how to calculate it.
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Learning Objectives
- Assess the influence of market equilibrium on the excess benefits received by consumers and producers.
- Gain an understanding of what constitutes consumer surplus and the technique used for its calculation.
- Familiarize oneself with the concept of producer surplus and how to calculate it.
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