1. What is Consumer Surplus?

Consumer surplus represents the difference between what consumers are willing to pay for a good or service and what they actually pay. It measures the economic benefit to consumers from market transactions.

2. How Does the Calculator Work?

The calculator uses the consumer surplus formula:

Where:

• \( Demand \) — Demand function (willingness to pay)
• \( Price \) — Market price ($)
• \( q \) — Quantity consumed

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

3. Importance of Consumer Surplus Calculation

Details: Consumer surplus is a key concept in welfare economics, helping to measure consumer welfare, evaluate market efficiency, and analyze 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 in dollars, and the equilibrium quantity. All values must be valid (price ≥ 0, quantity > 0).

5. Frequently Asked Questions (FAQ)

Q1: What does consumer surplus represent?
A: Consumer surplus represents the net benefit consumers receive from purchasing goods at market prices lower than their maximum willingness to pay.

Q2: How is consumer surplus graphically represented?
A: On a supply-demand graph, consumer surplus is the area below the demand curve and above the market price line up to the equilibrium quantity.

Q3: What factors affect consumer surplus?
A: Consumer surplus increases when prices decrease, when demand increases, or when consumers' willingness to pay increases.

Q4: Can consumer surplus be negative?
A: Typically no, since consumers wouldn't purchase if price exceeded their willingness to pay. However, in some forced consumption scenarios, it could theoretically be negative.

Q5: How is consumer surplus used in policy analysis?
A: It's used to evaluate the welfare effects of taxes, subsidies, price controls, and other market interventions by measuring changes in consumer benefits.