Surplus 3b

Consumer Surplus

• This is the difference between what the consumer is willing to pay and what they actually pay.
• Consumer surplus is located in the area under the demand curve and above the market price.
• Higher supply costs, which lead to higher prices for consumers causes a decrease in consumer surplus.
• An increase in demand causes consumer surplus to increase.
• When demand is inelastic, there is a greater c.s because more consumers are willing to pay a high price to continue consuming the…