Difference between revisions of "Consumer surplus"
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'''Consumer surplus''' is the net benefit a consumer obtains from buying a good. In supply and demand models, consumer surplus is represented as the value (price times quantity) captured above the price level but below the demand curve. | '''Consumer surplus''' is the net benefit a consumer obtains from buying a good. In supply and demand models, consumer surplus is represented as the value (price times quantity) captured above the price level but below the demand curve. | ||
| − | + | In a [[monopoly]], the loss in [[total surplus]] (known as [[social loss]], is from a reduction is the consumer surplus while [[producer surplus]] does not rise accordingly. However, if a monopoly can perfectly [[price discrimination|price discriminate]] the consumer surplus in the market will be zero, since the monopoly extracts all benefits — however, there will not be any [[deadweight loss]] and the market will be efficient. | |
[[Category:Economics]] | [[Category:Economics]] | ||
Revision as of 03:33, November 25, 2007
Consumer surplus is the net benefit a consumer obtains from buying a good. In supply and demand models, consumer surplus is represented as the value (price times quantity) captured above the price level but below the demand curve.
In a monopoly, the loss in total surplus (known as social loss, is from a reduction is the consumer surplus while producer surplus does not rise accordingly. However, if a monopoly can perfectly price discriminate the consumer surplus in the market will be zero, since the monopoly extracts all benefits — however, there will not be any deadweight loss and the market will be efficient.