Difference between revisions of "Consumer surplus"
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Consumer surplus is the net benefit a consumer obtains from buying a good. In supply and demand models, consumer surplus is represented as the value (price times quantity) captured above the price level but below the demand curve. | Consumer surplus is the net benefit a consumer obtains from buying a good. In supply and demand models, consumer surplus is represented as the value (price times quantity) captured above the price level but below the demand curve. | ||
| − | The [[social loss]] caused by a [[monopoly]] is the lost consumer surplus. | + | The [[social loss]] caused by a [[monopoly]] is the lost consumer surplus. Whether there is any other loss caused by the existence of a monopoly is open to dispute, however. Therefore, it is up to discussion whether the Sherman Anti-Trust Act is antiquated and should be ignored or replaced by a piece of legislation that would allow for the legal existence of monopolies. Laissez Faire capitalism and economic survival of the fittest would suggest that the United States should legally allow for monopolies to exist. |
[[Category:Economics]] | [[Category:Economics]] | ||
Revision as of 00:27, July 13, 2007
Consumer surplus is the net benefit a consumer obtains from buying a good. In supply and demand models, consumer surplus is represented as the value (price times quantity) captured above the price level but below the demand curve.
The social loss caused by a monopoly is the lost consumer surplus. Whether there is any other loss caused by the existence of a monopoly is open to dispute, however. Therefore, it is up to discussion whether the Sherman Anti-Trust Act is antiquated and should be ignored or replaced by a piece of legislation that would allow for the legal existence of monopolies. Laissez Faire capitalism and economic survival of the fittest would suggest that the United States should legally allow for monopolies to exist.