One concept of Economics

CONSUMER SURPLUS

The gap between the price what consumer willing to pay and what consumer actually pays is called consumer surplus.

Consumer’s Surplus  = Price willing to pay – Actual price paid

Advantages of consumer surplus:                                                                                     

1.It helps in taxation policy and make it easy.

2. It helps in welfare economics.

3. It clarifies the contradiction  of value.

4. It is useful in determining the price policy of a monopoly firm .

Example :

You want to buy one Paper rim from the shop in your locality,you prepared to pay Rs. 200 for the rim as it is MRP but seller ask to pay only Rs. 150  then you buy copy immediately. Here, consumer surplus is Rs. 50.