What are Consumer Surplus and Producer Surplus?

Consumer Surplus is the difference between the price that consumers are willing to pay, and the price that they actually pay. Similarly, Producer Surplus is the difference between the price for which producers are willing and able to produce a good, and the price that they actually receive. We can visualise this relationship on a Demand-Supply diagram. Consumer Surplus is the area above the Price line, and below the Demand curve. Producer Surplus is the area below the Price line, and above the Supply curve.

JT
Answered by James T. Economics tutor

4113 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What are barriers to entry?


What are the main causes of globalisation? (8)


Why do rising house prices cause an increase in aggregate demand?


State and explain all of the factors which can shift the demand curve of a product


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning