Consumer surplus: the buyer’s willingness to pay for a good
minus the amount the buyer actually pays for it.
The market demand curve depicts various quantities that
buyers would be willing and able to purchase at different
The CS can be illustrated as the area under the demand
curve above the selling price line.
Producer Surplus: the amount a seller is paid for a good
minus the seller’s cost.
It measures the benefit to sellers participating in a market.
Cost is a measure of the seller’s willingness-to-sell,
which is the lowest price a supplier will take to produce
Total Producer Surplus
a good and offer it for sale. When a producer receives
more than they are willing to take to produce a