Microeconomics - CS & PS Worksheet
Part 1
Consumer Surplus =
m the net benefit buyers enjoy from purchasing and consuming the good;
OR
m the benefit each buyer enjoys from consuming the good less what
each buyer must pay for the good; OR
m Willingness to Pay – Price
Height of Market Demand Curve: Reflects the benefit a buyer
enjoys from consuming a specific unit of the good.
Area Beneath the Market Demand Curve Lying Above the Price:
Reflects all the net benefits buyers enjoy, the consumer
surplus, from purchasing and consuming the good.
Imagine a tutoring [teaching] market where consumer surplus = the net benefit students receive from tutoring services
OR = the sum of the benefit each student receives for tutoring services less price. Complete the table below:
(cs= wtp-p)
Student
Andy
Kate
Dan
Liz
Meg
Ned
Consumer Surplus
Value of
Tutoring
Benefits
Net Benefit of Receiving Tutoring Services
If price = $250
If price = $150
If price = $50
$275
225
__25___
__0___
__125_
__75___
__225___
__175___
175
100
75
25
__0___
__0___
__0___
__0___
__25___
__25___
___0__
__0___
___0__
__225___
__125___
__50___
__25___
__0___
_600____
Page 1
Producer Surplus =
m the net benefit sellers enjoy from producing and selling the good.
m what each seller receives from the sale of the good less
the opportunity cost each seller incurs by providing it.
Height of Market Supply Curve: The seller’s opportunity
cost of providing a specific unit of the good.
Area Above the Market Supply Curve Lying Beneath the
Price: Reflects all the net benefit sellers enjoy, the producer
surplus, from producing and selling the good.
Producer surplus equals the net benefit Teachers receive from providing tutoring services: The sum of what
each major receives for his/her tutoring services less his/her opportunity cost. Complete the table below:
(ps=p-wts)
Net Benefit of Providing Tutoring Services
Cost to Provide Tutoring
Teacher
services
Kim
$275
John
225
Adam
200
Lisa
125
Walt
75
Beth
25
Producer Surplus
If price = $50
0__
__0__
__0___
__0___
__0___
__25___
__25__
If price = $150
__0__
___0__
__0___
___25__
__75___
__125___
__225___
If price = $250
___0_
__25___
___50__
__125___
__175___
___225__
__600___
Page 2