Consumer surplus refers to the variance between the price that consumers pay for a commodity and the price they are able and willing to pay for a good. When this is plotted on a curve representing supply and demand, consumer surplus represents the region between the demand price and the equilibrium price. An increase in the price of a good has an impact on reducing consumer surplus (Cohen et al., 2016). This is because an increase in the price of a good causes consumers to stop buying it or reduce the quantity of the good they consume. The consumers stop buying the good because they feel that the utility of buying the good does not match its price. A decrease in the price of a good has an effect of increasing consumer surplus (Cohen et al., 2016). This is because consumers can access goods, they want at less price that they are willing to pay. In other words, consumers surplus can only be achieved when buyers can afford the goods that they need. Read more

Recently, I was looking to buy my very first Television set. I identified several credible online dealers to compare the prices. What shocked me is that the prices were almost twice lower than I had anticipated. Believe it or not, I bought my first Television set, RCA TRK-48 inch at $4000. I had earlier expected that the television would cost me between $7000 and $10,000. The decrease in the price of the Television set increased my consumer surplus. Also, I took an uber ride from a hotel in the city to home and paid a whopping $20. I had anticipated that the ride could cost about $12.

Consumer surplus, also called social surplus is an economic concept. It means the difference between the price a consumer pays for an item and the price he would be willing to pay rather than do without it.