5 Steps to a 5 AP Microeconomics, 2014-2015 Edition

• The area under the demand curve and above the market price is equal to total consumer
  surplus.

70 › Step 4. Review the Knowledge You Need to Score High

Quantity

Price $

5.00

D 1

321

CS1 CS2 CS3

Quantity

Price $

5.00^

S 1

321

PS1

PS3

PS2

Figure 6.14

Figure 6.15

•The area above the supply curve and below the market price is equal to total producer

surplus.

Quantity

Price $

5.00

S 1

21 3

PS

CS

4

MB>MC MC>MB

D 1

Figure 6.16

TIP

TIP

$5 is above the marginal cost. The third unit earns no additional producer surplus, since

the marginal cost is exactly equal to the price received. Total producer surplus is the total

amount earned by these three producer transactions.

http://www.ebook3000.com