Consumer and producer surplus - Integration Applications

Consumer and producer surplus



Let S(q)S(q) and D(q)D(q) be supply and demand curves in terms of qq, where qq is the quantity.

Then we calculate the producer and consumer surplus by using the following formulas:

PSPS (producer surplus) = 0q[pS(q)]dq\int_{0}^{\overline q} [\overline p - S(q)] dq

CSCS (consumer surplus) = 0q[D(q)p]dq\int_{0}^{\overline q} [D(q) - \overline p] dq

Where p\overline p and q\overline q are equilibrium prices and quantity.

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Consumer and producer surplus

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