Economics_A-level_Edexcel
-
1-1-nature-of-economics6 主题
-
1-2-how-markets-work10 主题
-
1-3-market-failure4 主题
-
1-4-government-intervention2 主题
-
2-1-measures-of-economic-performance4 主题
-
2-2-aggregate-demand-ad5 主题
-
2-3-aggregate-supply-as3 主题
-
2-4-national-income4 主题
-
2-5-economic-growth4 主题
-
2-6-macroeconomic-objectives-policies4 主题
-
3-1-business-growth3 主题
-
3-2-business-objectives1 主题
-
3-3-revenues-costs-and-profits4 主题
-
3-4-market-structures7 主题
-
3-5-labour-market3 主题
-
3-6-government-intervention2 主题
-
4-1-international-economics9 主题
-
4-2-poverty-inequality2 主题
-
4-3-emerging-developing-economies3 主题
-
4-4-the-financial-sector3 主题
-
4-5-role-of-the-state-in-the-macroeconomy4 主题
-
5-1-the-exam-papers3 主题
-
5-2-economics-a-level-skills1 主题
-
5-3-structuring-your-responses9 主题
producer-and-consumer-surplus
Producer & Consumer Surplus
-
Consumer surplus is the difference between the amount the consumer is willing to pay for a product and the price they have actually paid
-
For example, if a consumer is willing to pay £18 to watch a movie and the price is £15, their consumer surplus is £3
-
-
Producer surplus is the difference between the amount that the producer is willing to sell a product for and the price they actually receive
-
For example, if a producer is willing to sell a laptop for £450 and the price is £595, their producer surplus is £145
-
Diagram analysis
-
The area between the horizontal equilibrium price line and the demand curve represents the consumer surplus in the market (ABPe)
-
The consumer surplus lies underneath the demand curve
-
-
The area between the horizontal equilibrium price line and the supply curve represents the producer surplus in the market (CBPe)
-
Producer surplus lies above the supply curve
-
-
When the market is at equilibrium the producer and consumer surplus are maximised
-
Consumer surplus + producer surplus = social/community surplus
-
Any disequilibrium reduces the social surplus
-
How Market Changes Affect Producer & Consumer Surplus
-
Any change to the condition of supply or demand will cause a shift in the relevant curve
-
This shift will change the consumer and producer surplus in the market
An increase in supply
Diagram analysis
-
Prior to the change in the condition of supply
-
Consumer surplus was equivalent to ACE and producer surplus was equivalent to ACF
-
Social surplus was equivalent to ECF
-
-
After the change, supply increased S1→S2
-
Consumer surplus was equivalent to BED and producer surplus was equivalent to BDG
-
Social surplus was equivalent to DEG
-
-
Both the consumer surplus and producer surplus have increased as a result of the increased supply in the market
An increase in demand
Diagram analysis
-
Prior to the change in the condition of demand
-
Producer surplus was equivalent to ACE and consumer surplus was equivalent to ACF
-
Social surplus was equivalent to ECF
-
-
After the change, demand increased D1→D2
-
Producer surplus was equivalent to BED and consumer surplus was equivalent to BDG
-
Social surplus was equivalent to DEG
-
-
Both the producer surplus and consumer surplus have increased as a result of the increased demand in the market
Examiner Tips and Tricks
MCQ frequently tests your ability to identify changes to consumer and producer surplus. In essay responses, even if it is not explicitly mentioned, you can refer to these concepts when evaluating dynamic markets and the impacts on different stakeholders. It demonstrates excellent economic knowledge and analysis.
Changes to consumer and producer surplus become slightly more complicated when analysing the impact of government intervention such as indirect taxes, subsidies and price controls.
Responses