CONSUMER SURPLUS

AND
PARADOX OF VALUE
 CONSUMER
SURPLUS

Is the difference between

willingness to pay for a good and
the price that consumers actually
pay for it.
 The maximum willingness to pay
of a consumer is 80 for the price
of concert tickets and the required
to pay is 20. The consumer surplus
is between the 20 and 80 under the
demand curve and above the
required to pay
 PARADOX OF
VALUE
Describes the vast difference seen
in the prices of certain essential
goods and
non-essential goods.
An example would be
water and diamond.
 The price is determined by
supply and demand. The supply of water and diamonds is
very different. The supply of tap water is very elastic.
Therefore, even as demand rises, price increases only a
little. The supply of diamonds is very limited, therefore,
supply is inelastic. It is the rarity of diamonds that is
pushing up the prices.
Thank you