Home

Tutoring

Subjects

Live Classes

Study Coach

Essay Review

On-Demand Courses

Colleges

Games

Opening subject page...

Loading your content

AP Microeconomics

Consumer and Producer Surplus

Learn Consumer and Producer Surplus in AP Microeconomics from the production AIPH study guide.

Study guide topics

Scarcity and Opportunity CostSupply and DemandMarginal Analysis and Rational Decision-MakingElasticity of Demand and SupplyMarket Structures: Perfect Competition to MonopolyConsumer and Producer SurplusPrice Controls and Real-World OutcomesTaxes, Subsidies, and Market EfficiencyExternalities and Public GoodsMastering Free-Response QuestionsUsing Diagrams Effectively

Advanced Topics

In a nutshell: Consumer and producer surplus measure the benefits that buyers and sellers get from market transactions.

## Measuring Market Happiness Surplus is a way to measure the benefit buyers and sellers get from participating in a market. ### Consumer Surplus Consumer surplus is the difference between what buyers are willing to pay and what they actually pay. ### Producer Surplus Producer surplus is the difference between what sellers are willing to accept and what they actually receive. ### Visualizing Surplus On a supply and demand graph, consumer surplus is the area above the price and below the demand curve. Producer surplus is below the price and above the supply curve. ### Why It Matters Surplus shows the gains from trade and helps economists judge how well a market is working.

Examples

  • A movie ticket costs $10, but you're willing to pay $15. Your consumer surplus is $5.
  • A farmer sells corn for $4 per bushel but would have accepted $3. The producer surplus is $1.
PreviousNext