ECO101H1 Lecture 4: Chapter 4
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ECO101H1 Full Course Notes
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If the prices just equal to the individual"s willingness to pay here she is indifferent to buying or not buying. Individual consumer surplus is the net gain to individual buyer from the purchase of a good. It is equal to the difference between the buyers willingness to pay and the price paid. Consumer surplus is graphic to both individual and total consumer surplus. The total consumer surplus generated by purchases of a good at the given price is equal to the area below the demand curve but above the price. In price will decrease consumer surplus by amount equal to the sum of the shaded areas. Willingness to pay as the maximum price at which here she would by a good. An individual by the good if it cost more than this amount but will be eager to do so if the cost is less.
