We can measure producer and consumer surplus by looking at a graph of supply and demand. Consumer surplus is:
A) the area above the supply curve but below the equilibrium price.
B) the area below the demand curve but greater than the equilibrium price.
C) the area below the demand curve all the way down to the quantity axis.
D) the combined triangular area below the demand curve and above the supply curve.

Question

Quizplus · Accepted Answer

Consumer surplus is the difference between the maximum a consumer is willing to pay for a good and the actual price they pay. On a graph, this is represented by the area below the demand curve and above the equilibrium price. Therefore, the correct choice is B, which describes this area as being below the demand curve but greater than the equilibrium price.

We Can Measure Producer and Consumer Surplus by Looking at a Graph