Short-notes on consumer surplus

Short-notes on consumer surplus

Consumer surplus is a willingness to pay the maximum which the buyer wants to pay for goods.Each buyers maximum is called his willingness to pay and it measures how much the buyers values the goods.Each buyer would be eager to buy a product at a prices less than his willingness to pay and he would refuse to buy the product at a price greater than his willingness to pay.

Example-

Balaji is willing to pay rs.1000, Chandan is willing to pay rs.800, and Danneil is willing to pay the market price of rs.600. Therefore, Balaji's consumer surplus is rs.400, Chandan surplus is rs.200, and Danneil is the marginal buyer who enjoys no consumer surplus in this transaction.

Ref from- PRINCIPLES OF MICROECONOMICS-N.Gregory Mankiw