1. What is Consumer Surplus?

Consumer Surplus is the difference between what consumers are willing to pay for a good or service versus what they actually pay. It represents the economic benefit to consumers in a market transaction.

2. How Does the Calculator Work?

The calculator uses the consumer surplus formula:

Where:

• \( Demand\ Function \) — The relationship between price and quantity demanded
• \( Price \) — The actual market price
• \( q \) — Quantity purchased

Explanation: The integral calculates the area between the demand curve and the price line up to the equilibrium quantity.

3. Importance of Consumer Surplus

Details: Consumer surplus is a key measure of economic welfare and market efficiency. It helps economists evaluate the benefits consumers receive from market transactions and the impact of policies like taxes or price controls.

4. Using the Calculator

Tips: Enter the demand function (e.g., "100 - 2q"), the market price, and the quantity purchased. The calculator will estimate the consumer surplus.

5. Frequently Asked Questions (FAQ)

Q1: What does a high consumer surplus indicate?
A: A high consumer surplus suggests consumers are getting significant value from the product relative to what they pay, indicating a competitive market.

Q2: Can consumer surplus be negative?
A: Normally no, as consumers wouldn't purchase if price exceeded their willingness to pay. Negative CS suggests measurement error or non-market factors.

Q3: How does elasticity affect consumer surplus?
A: More elastic demand curves (flatter) typically result in smaller consumer surplus, as consumers are more price-sensitive.

Q4: What's the difference between consumer and producer surplus?
A: Producer surplus measures benefit to producers (price minus marginal cost), while consumer surplus measures benefit to consumers.

Q5: How do taxes affect consumer surplus?
A: Taxes generally reduce consumer surplus by increasing the price consumers pay and reducing the quantity traded.