Question

Search YouTube for at least one video related to either consumer or producer surplus. offer a summary (at least 200 words) of what you learned from the video, and ensure to share the link to the video. This is for Principles of Macroeconomics.

Answer 1

Consumer Surplus: This video describes about consumer happiness by taking an example of computer purchase. A consumer can buy computer at the rate of $700, then the person realised that the computer is available from the market at the rate of $500. The net happiness is difference of 700 & 200. is $ 200.This is consumer surplus.

SUppose there is a production of computer happening and a manufacturer can produce and sell computer at 300$ , then the producer realised that in market most of the producers are selling computers at 500$ . Thus the surplus of production is difference between 500-300= 200$. This shows the willingness of supplier/producer to sell at different price. The equillibirium point is 500$ and everything between 300-500$ will be producer surplus. The total surplus producer+ consumer surplus is called as social welfare.