What is Consumer Surplus?
Consumer surplus is the economic benefit consumers gain when they pay less than the maximum price they're willing to pay. It measures the value gained from trade—the gap between reservation price and market price.
Consumer surplus is the difference between maximum willingness-to-pay and actual price paid, summed across all units: CS = (Max WTP − Price) × Quantity.
Try it: interactive calculator
Step-by-step worked examples
Sarah is willing to pay up to $15 per pizza. The market price is $8. She buys 3 pizzas. Consumer surplus?
CS = (Max WTP − Price) × Quantity CS = (15 − 8) × 3 CS = 7 × 3 = $21
A buyer willing to pay $50 for a coat buys it at $30. Surplus for 1 coat?
CS = (50 − 30) × 1 CS = 20 × 1 = $20
Customers willing to pay $100/month for Netflix, actual cost $10. 1000 customers subscribe. Total consumer surplus?
CS = (100 − 10) × 1000 CS = 90 × 1000 = $90,000
Flashcards
Quick quiz
Q1.Max WTP = $50, market price = $30, quantity = 2. Consumer surplus?
Q2.Price rises from $8 to $12. Quantity stays same. CS…
Q3.A video game selling at $40 when you'd pay $80. Surplus per game?
Q4.If market price equals max WTP, consumer surplus is…
The full card deck, worked steps and AI-tutor support for “What is Consumer Surplus?” are in Notek — study by hand before your exam.
Common mistakes
Consumer surplus is the same for all buyers. — Correct: It depends on each person's max WTP; different people have different surplus.
If price drops, consumer surplus stays the same. — Correct: Lower price = bigger gap from WTP = higher surplus.
Consumer surplus can be negative. — Correct: If you buy at all, surplus ≥ 0 (you wouldn't buy if WTP < price).
Surplus is the same as producer profit. — Correct: Consumer surplus is buyer benefit; producer surplus is seller profit.
FAQ
What is consumer surplus in economics?
The benefit gained when you pay less than your maximum willingness-to-pay for a good.
How do you calculate consumer surplus?
CS = (Maximum WTP − Actual Price) × Quantity purchased.
Does consumer surplus exist for all purchases?
Yes — if you buy, you're willing to pay at least market price, so CS ≥ 0.
Why is consumer surplus important?
It measures economic welfare and efficiency — shows how much buyers benefit from trade.