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Consumer Surplus

The benefit consumers gain when they pay less than the maximum they were willing to pay.

Formula

CS=12×ΔP×ΔQCS = \tfrac{1}{2}\times \Delta P \times \Delta Q

Variables

CSConsumer surplus
\Delta PPrice gap (willingness − price)
\Delta QQuantity

Example

Triangle with $10 gap × 200 units: CS = $1000

Did You Know?

Consumer surplus is the area between the demand curve and the price — a core measure of market welfare.

surpluswelfaremicro