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Consumer Surplus example
#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
To get an intuitive feel for this concept, consider the last thing you purchased.

Whatever it was, think of how much you actually paid for it.

Now contrast that price with the maximum amount you would have been willing to pay for it instead of going without it altogether. If those two numbers are different, we say you received some consumer surplus from your purchase. You received a “bargain” because you were willing to pay more than you had to pay.
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3.9. Consumer Surplus—Value minus Expenditure
cepts called consumer surplus and producer surplus to address that question. We will begin with consumer surplus, which is a measure of how much net benefit buyers enjoy from the ability to participate in a particular market. <span>To get an intuitive feel for this concept, consider the last thing you purchased. Maybe it was a cup of coffee, a new pair of shoes, or a new car. Whatever it was, think of how much you actually paid for it. Now contrast that price with the maximum amount you would have been willing to pay for it instead of going without it altogether. If those two numbers are different, we say you received some consumer surplus from your purchase. You received a “bargain” because you were willing to pay more than you had to pay. Earlier we referred to the law of demand, which says that as price falls, consumers are willing to buy more of the good. This observation translates into a negatively slope


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