Government Policies—Consumer and Producer Surplus Homework Help

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In any kind of transaction, the consumer has the willingness to pay a certain amount for a particular product or service, and there is also an amount that he actually pays for it. The difference that is obtained by subtracting what the consumer is willing to pay and what he actually pays is termed as the consumer surplus.

For example, in case there are three consumers, A,B,C who are ready to pay $300, $500, $600 respectively for a particular product. Then ‘C’ is said to have a consumer surplus of $300, ‘B’ is said to have $200 consumer surplus and ‘A’ has no surplus as he is making a marginal buy. Know more about consumer surplus by checking out Government policies—consumer and producer surplus homework help on

Consumer surplus = Amount consumer is willing to give – Amount consumer actually gives

Producer surplus

Again in a transaction, the producer has the capability and willingness of supplying a particular good at a specific rate whereas he might actually supply it at another specific value. The resultant after subtracting the amount that the producer wants to pay and the actual amount paid is termed as the producer surplus. Students wanting to know more about producer surplus can visit Government policies—consumer and producer surplus assignment help.

Producer surplus is used to measure the welfare of the producers in the following ways –

  • The producer surplus is the result of subtracting amount actually payable for a product from the amount that the product willing to be given for.
  • The curve of producer surplus is depicted by the curve of supply above and the price at the market below.

When the price of a product is high, it producer gets more amount for a product that can, in turn,be supplied to market. Know more about such parameters by checking out Government policies—consumer and producer surplus homework help.

Difference between producer surplus and consumer surplus

Every market in the industry wants a surplus; no business wants to run with losses. Thus surplus is necessary for the functioning of a firm. Business strives when both producers and consumers can have a surplus in their own way. Consumer surplus is the difference that comes on subtracting the amount actually paid for products from the amount that he wanted to pay whereas producer surplus is the benefit amount that the producer receives after his product gets sold. This is the basic difference between a producer and consumer surplus. To know more such distinguishing factors, students can visit Government policies—consumer and producer surplus assignment help.

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