Consumer surplus and Producer surplus
Consumer surplus and Producer surplus The concept of consumer's surplus was originally stated by Jules Dupuit in 1844. Later on, it was properly elaborated by Dr. Alfred Marshall i n his book ‘Principles of Economics.' Consumer surplus is the difference between what we are willing to pay and what we actually pay. According to Prof. Marshall “The excess of the price which he (consumer) would be willing to pay rather than go without the thing over that which he actually does pay, is the economic measure of this surplus satisfaction... It may be called “Consumer’s Surplus”. According to Penson – “The difference between what we would pay and what we have to pay is called Consumer’s Surplus.” Example: Suppose a consumer is willing to pay Rs.10 for a pen but the cost of that pen is only Rs.5, so the consumer actually pays only Rs.5 for it. Consumer's surplus= the price which the consumer is willing to pay- the price that he actually pays ...