Topic 24 · micro
Surplus and Market Efficiency
A market is useful because both the buyer and the seller come out ahead; the size of this gain is measured by surpluses.
Consumer surplus
The difference between what the buyer was willing to pay and what they actually paid. The lower the price, the bigger the surplus.
Producer surplus
The difference between the selling price and the lowest price the seller would agree to. The higher the price, the bigger the surplus.
Market efficiency
At equilibrium the sum of surpluses (the social gain) is at its maximum. Intervention (ceilings, floors, taxes) usually reduces it — deadweight loss appears.
🎯 Now possible
- explain consumer and producer surplus
- link equilibrium to efficiency
- understand the cause of deadweight loss
Cheat sheet
Consumer surplus = willing to pay − actual
Producer surplus = price − minimum
Equilibrium maximizes total surplus
Ceilings/floors/taxes → deadweight loss
Practice on this topic
Where to read more: Мэнкью — гл. 7–8Макконнелл–Брю — гл. 5