ECO100Y5 Chapter 4: Consumer and Producer Surplus - Ho
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ECO100Y5 Full Course Notes
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An individual consumer"s willingness to pay for a good is the maximum price at which he or she would buy that good. Individual consumer surplus is the net gain to an individual buyer from the purchase of a good. The term consumer surplus is often used to refer both to individual and to total consumer surplus. A rise in the price of a good reduces consumer surplus in a similar fashion. An individual seller"s cost is the lowest price at which he or she is willing to sell a good. Individual producer surplus is the net gain to an individual seller from selling a good. It is equal to the difference between the price received and the seller"s cost. Total producer surplus is the sum of the individual producer surpluses of all the. Economists use the term producer surplus to refer both to individual and to total sellers of a good in a market producer surplus.
