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.