Here's a quick problem to test whether you really understand what producer surplus and consumer surplus mean, rather than just relying on the geometry of demand and supply. For each of the two diagrams that follow, calculate producer surplus, consumer surplus, and total surplus. Assume the curves are perfectly vertical and perfectly horizontal.

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Price Price Demand Supply 12 50 Quantity Price Price Demand Supply 12 50 Quantity

Answer rating: 100% (QA)

Consumer surplus is the extra surplus generated for consumers because their maximum willingness to p... View the full answer