Who Benefits in a Market?

Consumer surplus is the difference between what buyers are willing to pay and what they actually pay. Producer surplus is the difference between the price sellers receive and the minimum they’d be willing to accept.

Visualizing Surplus

On a supply and demand graph, consumer surplus is the area above the price and below the demand curve, while producer surplus is below the price and above the supply curve.

Why Surplus Matters

Surpluses help economists measure the benefit to society from trade in a market.

Real-World Impact

• Shoppers find a coat on sale for $40, though they're willing to pay $60, gaining a $20 consumer surplus.
• A farmer sells apples at $2 per pound, though they'd accept $1, earning a $1 producer surplus.