1. What is Consumer Surplus?

Consumer Surplus is the difference between what consumers are willing to pay for a good or service (represented by the area under the demand curve) and what they actually pay. It measures the economic benefit to consumers.

2. How Does the Calculator Work?

The calculator uses the Consumer Surplus formula:

Where:

• \( \int_{0}^{Q} Demand\,dQ \) — Area under the demand curve from 0 to Q (total willingness to pay)
• \( P \) — Market price of the good
• \( Q \) — Quantity purchased

Explanation: The formula calculates the difference between what consumers were willing to pay (demand integral) and what they actually paid (P × Q).

3. Importance of Consumer Surplus

Details: Consumer Surplus is a key concept in welfare economics. It helps measure economic welfare, analyze market efficiency, and evaluate the impact of policies like taxes or subsidies.

4. Using the Calculator

Tips: Enter the area under the demand curve (demand integral) in dollars, the market price in dollars, and the quantity purchased. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What does a higher consumer surplus indicate?
A: A higher consumer surplus indicates greater economic benefit to consumers, often resulting from lower prices or higher willingness to pay.

Q2: How is the demand integral calculated?
A: The demand integral is calculated by finding the area under the demand curve up to the quantity purchased. For linear demand, it's the area of a triangle plus rectangle.

Q3: Can consumer surplus be negative?
A: Normally no, as it represents economic benefit. If calculated as negative, it suggests an error in measurement or extreme market conditions.

Q4: How does price elasticity affect consumer surplus?
A: More elastic demand curves (flatter) typically result in smaller consumer surplus, while inelastic demand (steeper) creates larger consumer surplus.

Q5: What's the relationship with producer surplus?
A: Consumer surplus and producer surplus together make up total economic surplus, representing the total welfare benefit from a market transaction.