What is a graphical example of a consumer surplus?

1 Answer
Mar 10, 2016

Answer:

Consumer Surplus is the difference between the price, consumer wants to pay for a commodity rather than go without it and the actual price, he does pay.

Explanation:

Consumer’s Surplus

Consumer Surplus = Potential Price – Actual Price

Consumer Surplus is the difference between the price, consumer wants to pay for a commodity rather than go without it and the actual price, he does pay.

Consumer's Surplus

According to the graph, the amount the consumer is willing to pay is OAEM. The amount the consumer actually does pay is OPEM. The surplus (OAEM – OPEM =) PAE is consumer surplus.