Total consumer surplus is the area under the demand curve and above
the price line. The area under the demand curve shows the total
valuation that consumers place on all units consumed. For example, the
total value that consumers place on units is the entire shaded area
under the demand curve up to At a market price of the amount
paid for units is the dark shaded area. Hence, consumer surplus is the
light shaded area.
The market demand curve shows the valuation that consumers place on each unit of the
product. For any given quantity, the area under the demand curve and above the price line
shows the consumer surplus received from consuming those units.3 Consumer surplus is part of what, in Chapter 5, we called economic surplus when we discussed
market efficiency. We will return to a detailed discussion of market efficiency in Chapter 12.
Q 0
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