ECN 104 Lecture Notes - Lecture 3: Economic Surplus, Economic Equilibrium, Demand Curve
Document Summary
A consumer"s willingness to pay for a good is the maximum price at which he or she would buy that good. Individual consumer surplus is the net gain to an individual buyer from the purchase of a good. It is equal to the difference between the buyer"s willingness to pay and the price paid. Total consumer surplus is the sum of the individual consumer surpluses of all the buyers of a good. The term consumer surplus is often used to refer to both individual and total consumer surpluses. The total consumer surplus generated by purchases of a good at a given price is equal to the area below the demand curve but above that price (under demand curve, above market price) A potential seller"s cost is the lowest price at which he or she is willing to sell a good.