Consumer surplus: define it and explain how economists derive the concept of consumer surplus imposing some assumptions on the consumer’s preferences and on its behaviour when choosing the allocation of limited resources.

Consumer surplus: define it and explain how economists derive the concept of consumer surplus imposing some assumptions on the consumer’s preferences and on its behaviour when choosing the allocation of limited resources.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter7: Market Efficiency And Welfare

Section: Chapter Questions

Problem 5P

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Question

Consumer surplus: define it and explain how economists derive the

concept of consumer surplus imposing some assumptions on the

consumer’s preferences and on its behaviour when choosing the allocation

of limited resources.

Consumer’s gain from trade. The consumer surplus is the area below the demand curve but above the equilibrium price and up to the equilibrium quantity. Consumer surplus is represented by area A.

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