- Consumer Surplus
- the difference between the price consumers are willing to pay and the market price
- the extra amount that a consumer is willing to pay above the price that is actually paid
- if the price increases from p to p1, consumer expenditure decreases from area pba to p1ca, this decrease of pbcp1, shows that less consumers are willing to pay the price above the market price
- if the price decreases from p to p1, the consumer surplus increases, (give areas), this shows that more consumers are willing to pay above the market price.
- A – Original Consumer Surplus A+B – New Consumer Surplus B – Additional Consumer Surplus
- changes in consumer surplus as the price difference has widened