• Entry
  • Reader's guide
  • Entries A-Z
  • Subject index

In economics, consumer’s surplus refers to the difference between what a buyer actually pays for a product and the maximum that the buyer would have been willing to pay. For example, if a buyer would have been willing to spend $40 on a shirt but finds it on sale for $10, that buyer realizes a consumer surplus of $30 on the purchase. Consumers’ surplus is used to refer to the aggregate difference between what consumers would be willing to pay for a given good or service and what they actually do pay (the market price).

Producer’s surplus, inversely, is the difference between the price actually received by a seller (or sellers) for a product and the minimum price at which the seller (or sellers) would have ...

  • Loading...
locked icon

Sign in to access this content

Get a 30 day FREE TRIAL

  • Watch videos from a variety of sources bringing classroom topics to life
  • Read modern, diverse business cases
  • Explore hundreds of books and reference titles