Producer & Consumer Surplus
Learn everything about the Producer and Consumer Surplus in this note.
Author:Krish Beachoo
Edu Level: Unit1
Date: Apr 7 2026 - 3:00 PM
⏱️Read Time:
What is Consumer Surplus
- Consumer Surplus is the difference between what consumers are willing to pay and the price the consumers actually pay.
- Consumer Surplius is the area below the demand curve, above the price line and to the right of the price axis.
Consumer Surplus = Amount Consumers willing to pay - Amount Consumers Actually Pay
What is Producers' Surplus
- Producers' Surplus is the difference between the price producers are willing to supply and the price they actually receive.
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Producers' Surplus is the area below the price line, above the surplus curve and to the right of the price axis.
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$ Producers' \space Surplus = D \space P_0 \space C $
Consumer's Surplus and Producer's Surplus
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$ Producers' \space Surplus = P_0 \space E_0 \space B $
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$ Consumer's \space Surplus = P_0 \space A \space E_0 $
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