Suppose,
Mr. Kharidar is buyer who wants to buy a smartphone within rs.8000,he decides he will pay maximum rs.8000 for the smartphone.
He went to a shop and asked for a phone, the shopkeeper showed some phones in that range.He selected one of the phone and started bargaining, he said he will pay rs. 6,500 ,at the end shopkeeper agreed to sell that phone in rs.7,200.
Mr. Kharidar got that phone within the amount he decided to pay. So, that difference of rs.800 is nothing but consumer surplus.
So "the difference between the price consumer is willing to pay and consumer actually pays. "is called consumer surplus.
Mr. Kharidar is buyer who wants to buy a smartphone within rs.8000,he decides he will pay maximum rs.8000 for the smartphone.
He went to a shop and asked for a phone, the shopkeeper showed some phones in that range.He selected one of the phone and started bargaining, he said he will pay rs. 6,500 ,at the end shopkeeper agreed to sell that phone in rs.7,200.
Mr. Kharidar got that phone within the amount he decided to pay. So, that difference of rs.800 is nothing but consumer surplus.
So "the difference between the price consumer is willing to pay and consumer actually pays. "is called consumer surplus.
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