Consumer Surplus vs Producer Surplus
Consumer Surplus and Producer Surplus are two Supply & Demand concepts in AP Economics that students often mix up. In short: consumer surplus is consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they pay. Meanwhile, producer surplus is producer surplus is the difference between the minimum price a producer is willing to accept and the actual price they receive. Here is how they compare side by side.
Consumer surplus is the difference between the maximum price a consumer is willing to pay and the actual price they pay.
It measures the net benefit consumers receive from buying a good or service. On a demand curve, it is the area below the demand curve and above the price paid, up to the quantity purchased.
Producer surplus is the difference between the minimum price a producer is willing to accept and the actual price they receive.
It measures the net benefit producers receive from selling a good or service. On a supply curve, it is the area above the supply curve and below the price received, up to the quantity sold.