Consumer surplus: Difference between revisions
(New page: {{cost-benefit analysis concept}} ==Definition== The '''consumer surplus''' on the purchase of a good is the difference between the value the consumer places on the benefits received...) |
No edit summary |
||
| Line 1: | Line 1: | ||
{{cost-benefit analysis | {{cost-benefit analysis basicdef}} | ||
==Definition== | ==Definition== | ||
Revision as of 01:03, 28 January 2009
This article gives a basic definition used in cost-benefit analysis of market transactions.
View other such definitions
Definition
The consumer surplus on the purchase of a good is the difference between the value the consumer places on the benefits received from the good, and the amount the consumer spends on the purchase.
Consumer Surplus = (Total value received by consumer) - (Total cost to consumer)
The total value received by a consumer is typically approximated by the highest price the consumer would have been willing to pay for the purchase, and the total cost to the consumer is approximated by the cost of the good.