What is a Consumer Surplus?

Consumer surplus is the difference between the highest price a consumer is willing to pay for a certain quantity of a commodity and the actual market price of those commodities. Marshall deduced the concept of consumer surplus from the theory of marginal utility value. Varian proposed several methods for calculating consumer surplus. Consumer surplus is an important indicator of consumer welfare and is widely used as an analytical tool. The social welfare of the industry is equal to the sum of consumer surplus plus producer surplus, or the difference between total consumption utility and production cost. In 1977, Ak Dixit and Stiglitz introduced the general equilibrium model of intrinsic economies of scale, and introduced the conclusion that the market considers the most moderate marginal profit and the society considers consumer surplus. It is generally believed that the condition for maximum consumer surplus is that marginal utility equals marginal expenditure.

Consumer Surplus

Consumer surplus refers to the difference between the highest price a consumer is willing to pay for a certain quantity of a commodity and the actual market price of those commodities

Consumer surplus, also known as consumer net income , refers to the difference between the highest total price that a consumer is willing to pay when purchasing a certain quantity of a certain commodity and the total price actually paid. Consumer surplus measures the additional benefits that buyers themselves feel.

Under the condition of voluntary transactions, consumers can improve their own situation by choosing the optimal consumption amount. With the help of the derivation above

Introduction

Tradition

1. Consumption is the sole purpose of all production. in

Impact of monopoly

Consumer interest

should be

Consumer's Surplus

Consumer surplus (Consumer's Surplus) refers to the difference between the price that consumers are willing to pay and the price they actually pay when buying a certain product

There are two points to note when understanding consumer surplus: ^[2]

First, consumer surplus is not an increase in real income, but a psychological feeling.

Second, the consumer surplus of necessities is large. Because consumers value the effectiveness of such items and are willing to pay high prices, the market price of such items is generally not high.