1. What is Consumer Surplus?

Consumer Surplus is the difference between what consumers are willing to pay for a good or service (their marginal willingness to pay) and what they actually pay. It represents the net benefit consumers receive from participating in the market.

2. How Does the Calculator Work?

The calculator uses the integral formula:

Where:

• \( CS \) — Consumer Surplus
• \( MWTP \) — Marginal Willingness to Pay function
• \( P \) — Market price
• \( Q \) — Quantity consumed

Explanation: The formula calculates the area between the demand curve (MWTP) and the price line from 0 to the equilibrium quantity.

3. Importance of Consumer Surplus

Details: Consumer surplus is a key concept in welfare economics, used to measure consumer welfare and analyze the effects of policies like taxes, subsidies, and price controls.

4. Using the Calculator

Tips: Enter the MWTP function (e.g., "100 - 2Q"), the market price, and the equilibrium quantity. The calculator will compute the consumer surplus.

5. Frequently Asked Questions (FAQ)

Q1: What does MWTP represent?
A: Marginal Willingness to Pay represents the maximum price a consumer is willing to pay for an additional unit of a good.

Q2: How is consumer surplus represented graphically?
A: On a standard demand-supply graph, it's the area below the demand curve and above the price line.

Q3: What factors affect consumer surplus?
A: Changes in price, income, preferences, and availability of substitutes all affect consumer surplus.

Q4: Can consumer surplus be negative?
A: Normally no, as consumers wouldn't purchase goods they value less than the price. However, in cases of addiction or necessity, it might occur.

Q5: How does elasticity affect consumer surplus?
A: More elastic demand curves (flatter) typically result in smaller consumer surplus for a given price change compared to inelastic demand.