Consumer Surplus
- In almost every market situation, there will always be some individuals who are willing to pay above what they actually have to pay to satisfy their demand
- However, consumers pay the price offered, and no the price that they’re willing to pay, and so potentially save some money.
- This is known as consumer surplus
- For the cinema trip scenario, the consumer would be willing to pay £4 for the first cinema trip, but the actual price of tickets is £1.50
- This means that the consumer receives a surplus of £2.50 (£4 – £1.50)
- When the demand is 5 trips per moth, the consumer will receive a surplus of £5.05 ((£4 – £1.50) + (£3 – £1.50) + … etc…)
