AP Microeconomics
Consumer Surplus, Producer Surplus, and Deadweight Loss Graph Explained
Consumer surplus is the difference between what consumers are willing to pay and what they actually pay, while producer surplus is the difference between the minimum price sellers would accept and the price they receive. When taxes or other market interventions occur, deadweight loss represents the reduction in total surplus from transactions that no longer happen.
Key Takeaways
- Finding Consumer Surplus (CS): Area below the demand curve and above the market price (equilibrium price)
- Finding Producer Surplus (PS): Area above the supply curve and below the market price (equilibrium price)
- Total Surplus = Consumer Surplus + Producer Surplus (the total benefit to society from market transactions)
- How do taxes affect surplus? (Taxes reduce both Consumer and Producer Surplus, creating Deadweight Loss)
Stop Reading. Start Drawing.
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Graph Gym Challenge
Draw a standard supply and demand graph showing market equilibrium. Label the areas of consumer surplus and producer surplus.
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Learn MoreInstructions
Draw a standard supply and demand graph showing market equilibrium.
To Do:
- Label the areas of consumer surplus
- Label the areas of producer surplus
- Mark the equilibrium price (Pe) and quantity (Qe)
Check Your Understanding
Question 1 of 2
Sarah is shopping for a new laptop. She is willing to pay up to $1,200 for a specific model, but finds it on sale for $950. What is Sarah's consumer surplus?