CONSUMERS,

PRODUCERS PRESENTATION BY-

AND
EFFECIENCY Shweta Singh
Kashish Prakash
OF MARKETS Manvi Charya
Yashika Khandodia
Riya Bahukhandi
STUDY
How allocation of resources affects economic well being.

ANALYIS
~Benefits that buyers receive from participating in
market.
~how society makes this benefit as large as possible

CONCLUSION
Equilibrium of demand and supply in a market maximises the
total benefit received by buyers and sellers
 CONSUMER
SURPLUS

benefits buyers receive from

participating in market
CONSUMER SURPLUS-
The amount a buyer
is willing to pay for
a good minus the
amount buyer
actually pays for it.

 USING DEMAND CURVE

TO MEASURE CONSUMER
SURPLUS

demand schedule reflecting

the quantity demanded by
consumers at different price
levels..
 When the price of good is 50,only
one consumer(A) is willing to pay
for the good.

when price decreases to 40, the

quantity demanded increases to
2(A,B)
consumer surplus of
A=willingness to pay -actually
paid
=50-40=10
(since A was willing to pay upto 50
for the good and now he is getting
the good at 40)

Now,the price decreases to 30,the

quantity demanded increases to
3(A,B&C)
Since B was willing to pay upto 40 and
he is getting price of 30 now....
also A was willing to pay upto 50 and
he is getting the good for 30 now
consumer surplus of A=50-30=20
Consumer surplus of B=40-30=10
Total consumer surplus=20+10=30
The area below the demand curve and
above the price measures the consumer
surplus in a market

On decreasing the price,

there is additional consumer

surplus for initial consumer (A)

and for new consumer (B)

 In most markets,
consumer surplus reflects
the economic well being.
higher consumer surplus
means consumers are
willing to pay way more
than they are actually
paying.
they are receiving the
most benefits out of
those goods and hence
increasing their welfare....
Figure 1.1 Figure 1.2