How to find consumer surplus at equilibrium?
Understand the Problem
The question is asking how to calculate consumer surplus at the point of market equilibrium, which involves understanding the demand curve, supply curve, and their intersection point. Consumer surplus represents the difference between what consumers are willing to pay for a good versus what they actually pay.
Answer
(1/2) * Qd * ΔP
The final answer is given by the formula Consumer Surplus = (1/2) * Qd * ΔP.
Answer for screen readers
The final answer is given by the formula Consumer Surplus = (1/2) * Qd * ΔP.
More Information
Consumer surplus represents the benefit consumers receive when they pay a price below what they are willing to pay. It's often depicted graphically as the area between the demand curve and the market price.
Tips
A common mistake is confusing the maximum willing price (Pmax) with the market price (Pd). Make sure to correctly identify and use these values in the formula.
Sources
- Consumer Surplus - Definition, How to Calculate, Elasticity of Demand - corporatefinanceinstitute.com
- Consumer Surplus | Formula + Calculator - Wall Street Prep - wallstreetprep.com
- Consumer Surplus Formula - Guide, Examples, How to Calculate - corporatefinanceinstitute.com
