What does consumer surplus mean?

Consumer surplus can be thought of as the feeling of getting a really good deal or a bargain. It happens when you would have been willing to pay an amount for something but the price was actually lower. What happens here is that your value of the good (what you were willing to pay) is more than the cost (price) so the difference gives a consumer surplus. For example, if I valued a chocolate bar at £5 because I loved chocolate so much, but the price was only £1, I'd get £4 of consumer surplus. In a market, the aggregate consumer surplus is the total surplus of all the people who were above the equilibrium price on the demand curve.

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Answered by Georgia B. Economics tutor

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