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The current price in the market for milk is $2.00 if the government imposed a price floor of $4.00 in this market total surplus would increase.
What is total surplus?
- A market's overall surplus serves as a gauge for the general well-being of all members. Combined consumer and producer surplus make up this amount.
- Consumer surplus is the gap between what customers are prepared to pay and what they actually pay for a good. Consumer advantages are quantified economically as consumer surplus.
- The economic concept of marginal utility, which is the additional enjoyment a customer receives from purchasing one more unit of an item or service, serves as the foundation for consumer surplus.
When customers pay less for a good or service than they are willing to, this is known as a consumer surplus. It measures the extra benefit that consumers get from paying less for something than they would have been prepared to.
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