1. What is Consumer Surplus?

Consumer Surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay. It represents the economic benefit to consumers in a market transaction.

2. How Does the Calculator Work?

The calculator uses the Consumer Surplus formula:

Where:

• \( Q \) — Quantity purchased
• \( P_{max} \) — Maximum price consumer is willing to pay
• \( P_{equilibrium} \) — Actual market price

Explanation: The formula calculates the area between the demand curve and the price line for each consumer, then sums them to get total consumer surplus.

3. Importance of Consumer Surplus

Details: Consumer surplus is a key measure of economic welfare. It helps assess market efficiency, the impact of policies like taxes or subsidies, and changes in consumer welfare over time.

4. Using the Calculator

Tips:

• Enter quantities as comma-separated values (e.g., "10, 15, 20")
• Enter corresponding maximum prices in the same format
• Provide the equilibrium market price
• The calculator will compute individual and total consumer surplus

5. Frequently Asked Questions (FAQ)

Q1: What does a high consumer surplus indicate?
A: A high consumer surplus suggests consumers are getting significant benefit from market transactions, often indicating competitive markets with prices below what many consumers would pay.

Q2: Can consumer surplus be negative?
A: Normally no, as it represents the area above price and below demand. If price exceeds willingness-to-pay, no transaction occurs.

Q3: How does elasticity affect consumer surplus?
A: More elastic demand curves (flatter) typically result in smaller consumer surplus, while inelastic demand (steeper) creates larger surplus.

Q4: What happens to consumer surplus when price decreases?
A: Consumer surplus increases as the area between demand and price grows, and more consumers may enter the market.

Q5: How is this different from producer surplus?
A: Producer surplus is the difference between what producers receive and their minimum acceptable price, representing producer benefit.