ECO101H1 Chapter Notes - Chapter 7, 13: Economic Surplus, Demand Curve, Economic Equilibrium
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ECO101H1 Full Course Notes
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O(cid:374)e of the (cid:271)asi(cid:272) u(cid:374)dersta(cid:374)di(cid:374)g that goes (cid:271)ehi(cid:374)d (cid:272)o(cid:374)su(cid:373)er surplus is the (cid:272)o(cid:374)su(cid:373)ers" willingness to pay- that maximum amount buyers will pay for a good. When the willingness to pay is higher than the price of the product then there is a consumer surplus. Therefore, we can say that consumer surplus is the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it. It measures the benefit that consumers receive when participating in a market. The demand curve can show the consumer surplus because it shows the willingness to pay of every marginal buyer; which means that if the cost was any higher than the willingness to pay, the consumer would leave the market. The area below the demand curve and above the price is the consumer surplus, and the demand curve for the market will show the total consumer surplus.
