Consumer surplus

And Producer surplus

Consumer surplus
What is it? The difference between what you paid, and what you were willing and able to pay. What does it look like? It is the area below the demand curve, and above the equilibrium price.

Consumer surplus

Consumer
surplus Equilibrium Price

Producer Surplus
What is it? The amount a seller is paid, minus the sellers cost. What does it look like? It is the area above the supply curve, and below the equilibrium price.

Producer surplus

Equilibrium Price

Producer surplus

Consumer & producer surplus

Consumer
surplus Equilibrium Price

Producer surplus

The magic of perfectly competitive markets

At equilibrium, both consumer and producer surplus are at their maximum Any interference with the equilibrium price in perfectly competitive markets will reduce total consumer and producer surplus

What effect will rent control have on Consumer and Producer Surplus?
Who are the consumers? Who are the producers?

Price Effect on consumer & producer surplus

Societys
Consumer
surplus Equilibrium Price

loss

Producer surplus

Rent Control

Any interference with the equilibrium price in perfectly competitive markets will reduce total consumer and producer surplus

What effect will a minimum wage have on Consumer and Producer Surplus?
Who are the consumers? Who are the producers?

Price Effect on consumer & producer surplus

Consumer

Societys loss
Minimum wage

surplus

Equilibrium Price
Producer surplus