Consumer Surplus

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  • Created by: lizaloo98
  • Created on: 06-04-16 16:43
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  • Consumer Surplus
    • defined
      • 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


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