written by Daurie Augostine

-- written by Daurie Augostine



Saturday, February 6, 2010

Consumer Demand Theory --- Consumer Surplus

Consumer surplus measures the difference between:

MU --- what a consumer values a good or service to be, and what they would be willing to spend to obtain that good or service
P --- the actual price of that good or service

Looked at on a graph, consumer surplus is the area below the demand curve and above the market price.