Microeconomics › Section C · Demand and supply › Topic C.5
Consumer surplus, producer surplus, and efficiency
Every voluntary trade creates value: the buyer values the good more than the money, the seller values the money more than the good. Consumer and producer surplus measure those gains, and together they define what economists mean when they call a market efficient - or, with price controls, wasteful.
In this topic
- What efficiency means
- Consumer surplus
- Producer surplus
- Worked example: measuring the surplus
- Why equilibrium maximises total surplus
- Worked example: a ceiling eats the surplus
- Deadweight loss
- Efficient, therefore good?
- Markets as a social mechanism
- Common mistakes to avoid
- Key takeaways
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