Figure 6-5 Consumer Surplus for the Market
pay for all six litres, which is $14.80, and then subtracting the $6.00 that
she actually does pay.
For any unit consumed, consumer surplus is the difference between the maximum amount the
consumer is willing to pay for that unit and the price the consumer actually pays.The data in the first two columns of the table give Moira’s demand curve
for milk. It is her demand curve because she will go on buying litres of
milk as long as she values each litre at least as much as the market price
she must pay for it. When the market price is $6.00 per litre, she will buy
only one litre; when it is $3.00, she will buy two litres; and so on. The
total valuation is the area below her demand curve, and consumer surplus
is the part of the area that lies above the price line.
Figure 6-5 shows that the same relationship holds for the smooth
market demand curve that indicates the total amount that all consumers
would buy at each price. Figure 6-4 is a bar chart because we allowed
Moira to vary her consumption only in discrete units of one litre at a time.
Had we allowed her to vary her consumption of milk one drop at a time,
we could have traced out a continuous curve similar to the one shown in
Figure 6-5.