How to Calculate Consumer Surplus
Consumer surplus is the area below the demand curve and above the price — for a straight-line demand curve, ½ × base × height.
Formula
Consumer surplus = ½ × base × height = ½ × quantity × (maximum willingness to pay − price)
Steps
- 1Find equilibrium price and quantity. Where the market clears (or the given price and the quantity bought).
- 2Find the demand curve's price intercept. The highest price any buyer would pay — where demand meets the price axis.
- 3Compute the triangle. Height = price intercept − price; base = quantity. Consumer surplus = ½ × base × height.
Worked example
If demand hits the price axis at $20, the price is $8, and quantity is 30, consumer surplus = ½ × 30 × (20 − 8) = ½ × 30 × 12 = $180.
Frequently asked questions
What is the difference between consumer and producer surplus?
Consumer surplus is the area below demand and above price (buyer gains); producer surplus is the area above supply and below price (seller gains). Together they make total surplus.
What increases consumer surplus?
A lower price or a rightward shift in supply raises consumer surplus; a price ceiling below equilibrium can raise it for those who still buy but creates a shortage.