consumer surplus

consumer surplus

also called  social surplus  and  consumer's surplus 

      in economics, 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. As first developed by Jules Dupuit (Dupuit, Arsène-Jules-Étienne-Juvénal), French civil engineer and economist, in 1844 and popularized by British economist Alfred Marshall (Marshall, Alfred), the concept depended on the assumption that degrees of consumer satisfaction (utility) are measurable. Because the utility yielded by each additional unit of a commodity usually decreases as the quantity purchased increases, and because the commodity's price reflects only the utility of the last unit purchased rather than the utility of all units, the total utility will exceed total market value. A telephone call that costs only 20 cents, for example, is often worth much more than that to the caller. According to Marshall, this excess utility, or consumer surplus, is a measure of the surplus benefits an individual derives from his environment.

      If the marginal utility of money is assumed to be constant for consumers of all income levels and money is accepted as a measure of utility, the consumer surplus can be shown as the shaded area under the consumer demand curve in the figure. If the consumer purchases MO of the commodity at a price of ON or ME, the total market value, or amount he pays, is MONE, but the total utility is MONY. The differences between them are the shaded area NEY, the consumer surplus.

      The concept fell into disrepute when many 20th-century economists realized that the utility derived from one item is not independent of the availability and price of other items; in addition, there are difficulties in the assumption that degrees of utility are measurable.

      The concept is still retained by economists, in spite of the difficulties of measurement, to describe the benefits of purchasing mass-produced goods at low prices. It is used in the fields of welfare economics and taxation. See utility and value.

* * *


Universalium. 2010.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • consumer surplus — ➔ surplus1 * * * consumer surplus UK US noun [U or C] ► ECONOMICS BUYER S SURPLUS(Cf. ↑buyer s surplus): »The economic benefit to individuals is often measured by consumer surplus …   Financial and business terms

  • Consumer Surplus — An economic measure of consumer satisfaction, which is calculated by analyzing the difference between what consumers are willing to pay for a good or service relative to its market price. A consumer surplus occurs when the consumer is willing to… …   Investment dictionary

  • Consumer surplus for software products — Consumer surplus can be calculated differently for software products than for other products. Customers tend to buy products with greater consumer surplus. Software companies should know what measure in their market analysis to determine their… …   Wikipedia

  • consumer surplus — the difference between the amount consumers would be willing to pay for fish and the amount they actually pay …   Dictionary of ichthyology

  • Surplus — may refer to:* budget surplus, the opposite of a budget deficit * in economics, economic surplus (including producer surplus and consumer surplus), and capital surplus * an excess of production or supply over demand (see supply and demand) *… …   Wikipedia

  • surplus — ▪ I. surplus sur‧plus 1 [ˈsɜːpləs ǁ ˈsɜːr ] noun 1. [countable, uncountable] ECONOMICS an amount of something that is more than what is wanted, needed, or used: • Sugar prices fell after revised estimates of the surplus for the current crop year …   Financial and business terms

  • Consumer's surplus — (Polit. econ.) The excess that a purchaser would be willing to pay for a commodity over that he does pay, rather than go without the commodity; called also {consumer s rent}. The price which a person pays for a thing can never exceed, and seldom… …   The Collaborative International Dictionary of English

  • consumer's rent — Consumer s surplus Consumer s surplus (Polit. econ.) The excess that a purchaser would be willing to pay for a commodity over that he does pay, rather than go without the commodity; called also {consumer s rent}. The price which a person pays for …   The Collaborative International Dictionary of English

  • Surplus value — is a concept created by Karl Marx in his critique of political economy, where its ultimate source is unpaid surplus labor performed by the worker for the capitalist, serving as a basis for capital accumulation.The German equivalent word Mehrwert… …   Wikipedia

  • Consumer cooperative — Consumer cooperatives are enterprises owned by consumers and managed democratically which aim at fulfilling the needs and aspirations of their members.[1] They operate within the market system, independently of the state, as a form of mutual aid …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”