Question

What is meant by Consumer Surplus

Answer 1

Answer:

Consumer means the person who buys somthing by paying some price for goods or service ( banking , electricity , transport e.t.c )

Answer 2

In Microeconomics,consumer surplus denotes the difference between the maximum price that any consumer or buyer is willing to pay and the price that he or she actually pays to purchase any product or service in the market.

Explanation:

• Consumer surplus is an economic indicator of consumer welfare.In other words,it implies how much the consumer can save in aggregate by purchasing or buying any good or service.
• Usually it is desirable that sellers or firms keep the market price of any product or service lower than the maximum willingness to pay consumers or buyers to attract new customers and retain the existing consumer base.However,in non-competitive market structure such as monopoly,monopolistic competition or oligopoly firms or sellers have relatively higher market power or price making ability compared to the competitive markets,the consumer surplus is consequently lower.
• Lower consumer surplus leads to lower economic welfare of consumers or buyers and proportionately higher producer surplus or producer economic welfare in the market and vise versa.