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What is Consumer Surplus
Consumer Surplus is a term of economic theory, which indicates the difference between the maximum amount that a buyer would be willing to pay for a certain quantity, and the amount that he actually pays (market price).

Consumer Surplus is a term of economic theory, which indicates the difference between the maximum amount that a buyer would be willing to pay for a certain quantity, and the amount that he actually pays (market price).

Consumer Surplus in practice: Consumer surplus is the benefit that the consumer gets without paying for it. It arises from the fact that the marginal utility of the first piece of goods purchased is greater than the market price up to the last piece purchased when the marginal utility equals the price. For example, if a consumer is willing to pay for the first piece of product USD 50, for the second piece USD 40 and for the third piece USD 30, and the market price is USD 30 (i.e. he pays for each piece USD 30), then the consumer surplus will be USD 30 (50 -30 + 40-30 + 30-30).

Consumer Surplus graph

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Last update: 18.08.2016

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