Wize AP Microeconomics Textbook > Efficiency

Consumer Surplus

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Consumer Surplus
Consumer's Willingness to Pay - the maximum amount that a consumer will pay for a good (shown on demand curve).

Consumer Surplus - the amount a consumer is willing to pay for a good minus the amount they actually pay for it. 


Consumer Surplus for Individuals
In the diagram below, if the actual market price right now is $4, then the consumer surplus for the first consumer is $6
 which we find by doing $10
 (willingness to pay) minus $4
 (actual price paid).

For the second person the consumer surplus is $3
 which we find by doing $7
 minus $4


For the third person the consumer surplus is $0
 which we find by doing $4
 minus $4



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Total Consumer Surplus at Equilibrium

Total Consumer Surplus= (Base) ⋅ (Height) ⋅ (12)\boxed{\text{Total\ Consumer\ Surplus} =\ (Base)\ \cdot\ (Height)\ \cdot\ (\frac{1}{2})}Total Consumer Surplus= (Base) ⋅ (Height) ⋅ (21​)​

In the diagram above, the total consumer surplus is 15 * (80-50) * 1/2
 = $225

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Example: Consumer Surplus
The willingness to pay for three consumers is provided below and the current market price of ice cream is $5. Find the total consumer surplus.

Consumer        Willingness to Pay (Marginal Benefit)

Mary                                        $12
Mike                                         $6
Barbara                                    $4

$8

Consumer surplus for Mary = 12 - 5 = 7
Consumer surplus for Mike = 6 - 5 = 1
Consumer surplus for Barbara = 0 (because she is not willing to buy the product)

Total Consumer Surplus = 7 + 1 = 8

Practice: Consumer Surplus
The price of a milkshake is $8 the quantity demanded is 100 units. If the price rises to $9, the consumer surplus will: 