Consumer's Surplus

                Consumer Surplus

The excess of price which a man would be utility to pay rather than go without the thing,over that which he actually does pay is the economic measure of surplus satisfaction

The products which we pay less and get satisfaction more than the price. For example newspaper cost is 5 rs incase ,so we get so much news at price of only 5 rs

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Suppose a person purchases 6 mangoes and he pay 1 rs for each unit.

But we can see he can get utils of  6rs for first unit.

5rs for second unit

4rs for third unit

3rs for fourth unit

2rs for fifth unit

1rs for sixth unit

So as per different price case he is ready to pay rs 21 for all unit but he gets different utils.

But he pays only 6 rs for all

So surplus is 15 rs

Surplus is total utility -x (x is amount which we pay in real)

Assumption

•the marginal utility money remain same

•the supply and utility of one product does not effect the supply and utility of another products

•income ,taste and fashion are considered to be static

•utility is measurable

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Importance

1-importance in the comparison of price of the products in the ecomic life

2-importance of theory of monopoly value

3-no expensive international rates

4- cost benifit