Edexcel Economics Micro AS

Can someone explain what an Increase in Consumer and Producer Surplus does? Does an Increase benefit Consumers and Producers or what? Also what does a Decrease in Consumer and Producer Surplus do?

Reply 1

_cryinglightning

A increase in CS and PS causes an increase in consumer welfare and producer welfare (which is beneficial).

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Reply 2

Dennisomics

Firstly, CS and PS is the difference between what C and P were willing to sell/pay and what they actually end up paying/selling.

Example: if the cost of production were to lower (good harvest in wheat industry) S would shift out wards creating a new equilibrium as Producers would be willing to sell for less, this would cause CS to increase (and I think PS as well) as the difference between what they were willing to pay and what they do increased, this means that now Consumer gain (the benefit towards the consumer) has increased

this what I can explain in short.

also there can be negative affects towards CS and PS say through taxes lowering CS and PS gain.

(edited 7 years ago)

Reply 3

Fox Corner

Original post by TheProKi

Can someone explain what an Increase in Consumer and Producer Surplus does? Does an Increase benefit Consumers and Producers or what? Also what does a Decrease in Consumer and Producer Surplus do?