Test 3 Review
____ surplus is the area below the demand curve and above the price line.
*Consumer surplus* is the area below the demand curve and above the price line.
____ surplus is the area above the supply curve and below the price line.
*Producer surplus* is the area above the supply curve and below the price line.
_____ is the value received by consumers that is in excess of the price they pay.
Consumer surplus
Consumer surplus can be measured if the ____ is known.
Consumer surplus can be measured if the *demand curve* is known.
*Figure 6.1* shows hypothetical market demand and supply curves for milk. Determine the producer surplus.
Consumer surplus is the area *above the supply curve and below the price line* or the area of the triangle given by the formula (1/2)*(height)*(width) (1/2)*($3.20-$1.50)*(10,000)=$8,500 (1/2)*($1.70)*(10,000)=$8,500
*Figure 6.1* shows hypothetical market demand and supply curves for milk. Determine the consumer surplus.
Consumer surplus is the area *below the demand curve and above the price line* or the area of the triangle given by the formula (1/2)*(height)*(width) (1/2)*($4.50-$3.20)*(10,000)=$6,500 (1/2)*($1.30)*(10,000)= $6,500
Since the demand curve is a summary of the value that each consumer places on a particular good, the area between the demand curve and the price line is a measurement of ____.
Since the demand curve is a summary of the value that each consumer places on a particular good, the area between the demand curve and the price line is a measurement of *consumer surplus.*