Consumer Surplus

Statement

Consumer surplus refers to the difference between the maximum price a consumer is willing and able to pay for a good or service and the actual amount they pay.

Notes

Consumer surplus is a measure of the welfare consumers derive from a transaction. On a diagram it is the area below the demand curve and above the price line, up to the quantity bought; how it is read off the equilibrium diagram, alongside producer surplus, is set out in consumer and producer surplus.